RHE another significant(1000%) pulse increase.
Updated
RHE another significant(1000%) pulse increase. The RHE chart is a strong momentum rising price movement. I have written about the reason for this several times. The fundamental reason is the price formation of the brokerage firms quoting it. The RHE is a typical "meme stock", so it is unnecessary to look for an economic or other fundamental reason behind the movements. The company has a public float of nearly 1.7 million shares. A significant number of these are not in daily trading, as some investors temporarily withdraw shares from the market through long-term purchases or "desk drawers". Therefore, even with a medium daily trading volume, the system is not able to serve traders with shares. Large quantities of "digital shares" are then created, backed by the commitment of the issuing brokerage firms. For this type of share, there is a turnover of up to 40 million shares per day, with an actual daily turnover of no more than 3-400 thousand shares. With several brokerage firms committing to deliver "digital RHE shares" to each other, a huge pyramid scheme is taking shape. (To reassure you, the situation is similar for other low-cap stocks.) This is spectacular when there is a more pronounced movement, for example, in the upward direction. Traders taking short positions borrow from their brokerage firm early in their trading. This loan (when opening an RHE short position) is nothing more than a "digital RHE share claim" subscribed by another brokerage firm. So it is another loan. As these credits multiply within a short period of time, they create an immediate liquidity shortage in an established short loss position, which results in an immediate close out of the short position regardless of where the stop order is. This creates a forced liquidation spiral. Brokerage firms, in order to protect their own liquidity, immediately close short positions, pushing price movements to unbelievable heights. This can be seen on the RHE charts. It could be more than 100% in a few hours. This huge surge can be limited by the SEC regulation of 2010, which suspends trading for a short period of time in case of a 10% price movement. This is why we can continue to expect extreme rises in the shares of companies with small capitalizations and few public floats like RHE.
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