Friday, January 2, 2009

McClatchy stock soars 36 percent on Friday on heavy volume

McClatchy (MNI) shares soared 36 percent in the first trading day of 2009, jumping 31 cents to close at $1.09 a share. Volume was very heavy, with 753,879 shares trading; average volume for MNI is 589,000 shares per day.

During 2008, McClatchy shares fell 93.6%, eventually ending the year at just 80 cents per share.

In comments, an explanation.

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Anonymous said...

Big Short positions unwinding. All profits taken now don't get taxed until next year. There is still a 17+ million short interest, most of which is looking for a way out.

Anonymous said...

But who is buying?!

Anonymous said...

The premise that someone has to be buying when people are selling is a general concept not supported by the facts. The exchanges have methods of providing liquidity with Trade Specialists and ECN's (Electronic Communications Networks) which have huge blocks of many stocks that trade on both sides, regardless of the retail environment. They make their money off the difference in the bid/ask price spread.

When short sellers are unwinding positions, they are literally buying the shares back that they borrowed from a share holder and make their profits off the difference in the price that they borrowed them at. These buys force the price up making it appear that your stock has had a good day, when the reality for MNI is just the opposite. It would take MNI over 34 days of every share trading to eliminate their huge short interest.

Falling below one dollar necessitated the desire to cover these positions en mass, and the end of the year made it possible to defer the tax consequences.

It all sounds a little complicated but the basic concept is actually elementary. It is the details, little rules and lexicon that makes it appear more difficult to grasp than it really is.