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Hello all, I was doing some research since the chapter 11 announcement and figured I’d share some things with the community. BBBY and any company that goes into bankruptcy typically has one last good push before its burnt all the way out. I noticed in my research that there are some common core elements to what engineers these short squeezes and they are certainly worth noting. Having studied alot of Wyckoff lately, I’v come to evolve my understandings behind the why which is equally as important as the how. The market is indeed a composite man. This is a man who designs markets for you to lose. Things will be designed in such a way that what looks to be a massive run on the horizon turns into fat red bars the next week. What looks to be absolutely doomed suddenly produces fat green bars the next week. So on and so forth. The composite man doesn’t care about fundamentals. He is purely concerned with prices and profits. He pushes pain points to accomplish his objective. He fleeces the paper handed because the money is better off in his hands. Conversely he also encourages you to hold with one hand while actively playing against you with the other. This phenomena in markets is the only thing that explains any post bankruptcy announcement rally. There simply are no fundamentals anyone can actually point to as to why Hertz rallied or why Revlon rallied. These are short squeeze which in turn are simply engineered by various funds with the capital to push a shorts pain points. Once the objective is accomplished, the bag is then passed off to retail to hold at the top while the engineers have already left. Lets take a look at Hertz. “The Estero, Florida-based company’s lenders were unwilling to grant it another extension on its auto lease debt payments past a Friday deadline, triggering the filing in U.S. Bankruptcy Court in Delaware. Hertz and its subsidiaries will continue to operate, according to a release from the company. By the end of March, Hertz Global Holdings Inc. had racked up $18.7 billion in debt with only $1 billion of available cash.” Sound familiar? This news came out after hours on Friday May 22nd. Traders had the whole weekend to let the bankruptcy fumes simmer. Check out the price action below or the link here: https://ir.hertz.com/stock-information/historic-price-lookup Now comes the week of the bankruptcy announcement The stock cratered from 2.84 to close at 0.56 the first trading day post announcement. This however did not take that long to be bought up. You can see quite clearly the day low period on the far right column only shows a progressive buildup of higher lows. 40 cents to 80 cents to $1 all by the end of that trading week. Here is where the fleece begins. You hear its going out of business. The shares will be worthless. So the time to sell is *NOW*. You have heard its time to buy the rumor and sell the news. But against all logic, the correct move the entire time was to sell the rumor and buy the news. The following week brought the following prices: In the case of Hertz, if you sold into the bankruptcy news, you actually got fleeced as just waiting 9 trading days (which is eternity to day traders) could have actually netted you a nice profit even if you bought the closing price prior the bankruptcy announcement. Yet EVEN HERE you were foolish to sell as the following week could only fill one with massive regrets: *The highest prices came exactly on the 10th day after bankruptcy announcement* This is not to say BBBY is in some T-10 pattern or something like this. Remember remember that the composite man doesn’t care about dates. He cares about prices. 1st Bankruptcy close trading day was 0.56. June 8th saw a closing of 5.53 (987.5%) and a high of 6.25 (1,116%) that day compared to its bankruptcy closing price. So what is going on here? Why its Hertz even rallying at all? It was only ever about the fleece. There is a reason that Jun 5th run up finds virtually no news actually at all. Here is proof and you can search yourself: If you were purely relying on some news narrative to steer your investing decisions, not only would you have no idea Hertz just had a massive rally that first week, but there was virtually no *reason* for hertz to rally and in that is the exact reason it rallied. Ever since the GME saga, institutions and hedge funds have had the luxury of staying anonymous in their plans. If something *rallies for no reason* it can just be blamed on retail. Once someone blames retail, its very easy for the public to accept that mf’s are just buying the stock because they are idiots. But the people buying this stock at 50 cents and selling it 10 days later at 6 bucks are not idiots. They are actually geniuses that engineered it all. Take this ridiculous headline for example: This is on June 7th after the mystery move forwhich the public was warned to stay away from the robinhood crowd as they are highly regarded. Yet even here on June 7th, retail missed out on that 100% gain just 5 trading days later. This case and point is concluded quite straightforwardly that no mental gymnastics are required at all to get a bankrupt stock returning 1000% gains. The reason these rallies happen is because too much imbalance on the short side. Take for example that if you short a stock that indeed gets delisted, you literally make 100% profit. This is actually free money minus your borrowing fee. So right now short sellers and traders all over the world just had the free money glitch pop up in their news cycle and are indeed in here on the short side today. In fact it actually would behoove anyone to just flat out join in on the short selling as again who in the world wouldn’t take free money? The guy who would prefer more than a 100% gain, thats who. To be clear, hedge funds are never on the same team. One hedge funds error is another’s massive gain. They fleece each other all the time. Its why several hedge funds were apart of the GME squeeze and BBBY’s squeeze yet they go unmentioned by the news cycle then and now. Now lets look at Revlon. They hit everyone with the news on a Thursday pre markets. But according to the chart, bankruptcy was already priced in. Notice the open, close and the high/lows at the top of this chart: So what happened after? Surely Revlon went to 5 cents a share instantly wiping out shareholders overnight the following week right? Get fleeced. What was a $2 stock is now a $8 stock with a high of 9.89 on that day. This represents a 400% plus gain and that gain speaks for itself…again. Not only is the coming move as obvious as possible via the increase sudden volumes, the stock didn’t wait 10 trading days to make its move higher, it simply did this within the 3rd trading day post announcement. Even if you were too prideful to sell into that rally, the market gave you another chance at virtually the same prices multiple days over the course of an entire month. Surely there was some super material thing going on to make that rally possible? No. Rumors were used certainly, but absolutely nothing material changed for Revlon at all in this period. The stock still ended up ultimately cratering like Hertz, but before that crater was the same roach situation Hertz had. Afterall, shorting a stock to 0 is a 100% profit right? So why wouldn’t every short seller on the planet just pile in there? What is expected *never* happens. If there is ONE thing all bankruptcy runs have in common, its that they are all fueled by incredible rumors of buyouts, loans to keep the biz going etc. It is these rumors that are the common core to any stock making any run. It is the reality that is common core to any stock tanking in the weeks after. The 2nd thing all bankruptcy runs have in common is that they are highly publicized. Everyone and their grandmother is made aware of Hertz going under. Everyone and their grandmother is aware Revlon is going under. Everyone and their grandmother is aware bed bath & beyond is going under. The more publicity to the situation, the more money that can be attracted to the situation. This is where the engineers of any short squeeze make their money. Nothing to squeeze if no one is overly short. Enter our recent chart on ol BBBY: Why was BBBY rallying on April 18th? I actually asked myself this question as I could not logically think of much of an answer. But then I thought about Wyckoff and the composite man. Whoever accumulated these shares all of April when the volumes pick up, was in turn able to actually sell it all off at a profit. But I do not think this was the end goal. This push imo was a test if you will. Let me run this stock up and see where the pain points are at. The composite man again doesnt give a dam about fundamentals or what *should* happen. He simply needs to know where the pain points are before the full plan is carried out. Ask yourself about that rally. The market already knew about bankruptcy as did all of you. BBBY itself literally stated its probably going into bankruptcy and soon. At the end of the day, this is about money. The market provides no free lunches. Terrible earnings report? Buy puts at open and get fleeced by fat green bars. Company reports best earnings in its company history? Buy calls at open and get fleeced as the red bars come rolling in. Market gapped up? Get fleeced as it deteriorates back down. Gapped down? Get fleeced on the way up. Company just declared bankruptcy? Go short! But then get fleeced. So what if BBBY replicates this move? If its Revelon reincarnated, it would run anywhere from 0.75 to 0.93. If its like Hertz? It could go anywhere from $1.86 to $2.10. All it takes is virtually any person, fund or group with a couple million bucks to fire things up so to speak. The market cap is so low that with just $8 million, you can tie up 10% of the float. One hedge funds free lunch is another hedge funds free dinner. TLDR; More often than not, the trading day directly after a bankruptcy announcement provides the best buying day from a historical standpoint. Should this be the case, the stock will ignore all fundamentals and purely trade on rumors and rumors of rumors. I don’t need to tell any of you that anyone in this play is playing with fire being actively douzed in gasoline. Examine yourself. Examine the composite man. Selah submitted by /u/snippythehorses to r/BBBY |