Reason #3: The News Triggered A Short Squeeze
Finally, the news issued by BIMI today seemed to have triggered a short squeeze. For some time now, short sellers have been leaning on NF Energy Saving, sending the price of the stock tumbling.
However, if you’re a short seller, you know that when prices go up on heavily shorted stocks, short sellers can lose tremendous amounts of money. As a result, as prices go up on heavily shorted stocks, we tend to see short sellers abandoning their positions.
That seems to be the case today as the shorts are, well, losing their shorts. So, a lot of the climb seen today is likely the result of short sellers racing to cover their positions and minimize the losses that they are taking on the move.
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