Naked Short Selling and Market Returns
"Our results also suggest that stocks that experience persistent fails are susceptible to short squeezes, as shares move from a normal state where short exposure is established by borrowing and selling to a hard-to-borrow state where fails become a more attractive option for establishing short exposure."
the harder it is to borrow legally...cheating is more common... BIG DUH.
"Contrary to recent claims that naked short sellers are momentum traders who drive down stock prices, we find that returns are typically positive just prior to periods of increased naked short selling that result in persistent fails and that returns generally remain positive for several weeks afterwards."...
but what about the persistent impacts of having increased stock supply after increased demand wanes? I would not have limited my research to immediate impacts (0-2 weeks...)
Well frankly I think short sellers do short into strength and attempt to hold into weakness(or create the weakness with FUD) so this isn't surprising to me...
what about the cycling effects (fail, cover, fail, cover, fail, cover)
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