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Many stocks went up significantly during this week for seemingly no reason. I think I know the real reason. This week, the SEC said they are cracking down on naked shorts. So, brokerages frantically tried to cover themselves and made sure they had stocks to cover their clients short sales. This caused massive buy orders on the shorted stocks. And what stocks rose during this week? Those with high short ratios. FNM, FRE, LEH, GM, DAL, CTX are some that come to mind. If my theory is true, then expect these stocks to resume to fall starting next week or so.

Posted: 2008-07-18 14:59:49

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