FTD VOLUME IN SHORTED STOCKS HAVE CLEAR CYCLES - HODL 🚀🚀🚀

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u/floW– Reddit

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I’ve been looking at a lot of numbers recently and I have a much longer post in the works that goes through everything, but

I felt that I needed to offer this now.

Not financial advice.

Have you ever asked yourself, “XYZ crushed their earnings last week, yesterday they they released two new products, how are they down 3 straight days?”

Or better, have you heard CNBC say, “XYZ is up 35% in the last three days on news some policy announced three months ago?”

A large part of the reason shit doesn’t make sense has to do with FTD’s. Check out FTD stats for a bunch of companies and compare that to price and you’ll notice a few things pretty quick:

  1. Some dates (usually clusters of 3-6 days) have spikes in FTD volume that can be double, triple, or orders of magnitude higher than other dates. Price normally falls after dates with such high FTD volume. Duh, every unsettled FTD is excess supply.

  2. Stock price normally makes a full recovery, if not more, by 6 trading days after the FTD spike (due to the T+6 rule). Usually prices accelerate as the 6th day approaches, and sometimes they rapidly accelerate for 1-2 more days before dropping.

  3. If the stock price doesn’t fully recover 6-8 days past the FTD spike, it typically will not recover until ~35 days after the spike, due to the 35 extension rule available to Market Makers.

  4. If the stock price does not fully recover by 35 days, it often begins acceleration ~35 days later, continuing to accelerate for another ~35 days before slowing. This ends in another FTD spike.

I don’t know why this long cycle occurs, but since it’s a MM issue beyond 6 days, I’d imagine it has to do with manipulating ETF’s.

for example

Take a look at TSLA’s FTD data toward the bottom of the page. Those massive spikes are on 9/1 and 12/16. The 5 trading days after 9/1, TSLA fell from $475 to $330 before climbing to $450 in the next 5 days. It did not recover until 37 days later on 10/7. ~3.5 months after the 9/1 spike, TSLA had another massive FTD spike and the price doubled from $400 in late November to $800 in early January.

Here is SNDL’s FTD data for comparison. FTD spike is 2/1 at $1.21 and the price reached $3 on the 8th following trading day.

How about DraftKings? Two spikes just under 4 months apart. One in late June and no recovery until early September (~70 days) ending in another FTD spike in October.

Note: the effect of these spikes is largely relative to its percentage of daily volume

IN MY OPINION

I believe GME is in the seat TSLA was in during Feb. 2020. I think TSLA has been slowly squoozing since early 2020 and happened to be the first of many riding the rocket of unwinding shorts.

TSLA rose up to $180 on 2/21/2020 then fell to $85 in March. It’s recovery began on 3/27, but it didn’t recover the $180 mark until the middle of June, just under 4 months from the spike in Feb. I’d bet there was a FTD spike in the first half of June but idk. After it recovered $180, it climbed to $475 by 9/1, and the rest of the story is above.

GameStop’s FTD cycles are massive and they’ve only gotten bigger.

May to September, September to January, January to ???

The difference with GME is low supply.

We own the float.

HODL