's a legal collection of zombie stocks that they are using to meet collateral requirements. Requirements. And temporarily avoid. Margin calls has just been exposed today.

I want to talk what these stocks are and what they do and why citadel is only temporarily avoiding bankruptcy. So stay tuned. And let's make some money and i want to dive straight in with the key information. So nazim tweeted saying guys.

I just found their swap basket and guess who the prime broker dealer actually is wait for it citadel securities. They're using over 8 490. Over the counter. Zombie stocks and swaps to maintain collateral and avoid being wiped out by a margin call if we go to the broker dealer directory.

And find citadel securities. We can see their current security list these are the securities that they are using for collateral to meet margin requirements. This current security list is full of 8490 different securities and the majority of them trade on the pink sheets or in the over the counter market. Citadel.

Holds adrs. Common stock and ordinary shares in thousands and thousands of these pink sheet. Companies or these. Tiny companies or zombie stocks that trade on the over the counter market.

Now. You may remember a number of months ago. I spoke about zombie stocks in more detail. These are companies that have previously been seller boxed by hedge.

Funds. Maybe. Citadel securities. Or maybe by many others.

And have effectively been relegated from the new york stock exchange or from the nasdaq. Many of these companies were seller boxed and forced into bankruptcy. They ended up restructuring being listed on the over the counter market and still trade to this very day even though these companies are technically bankrupt some example of these otc stocks is sears blockbuster toys r us and many others once upon a time these stocks were traded on the new york stock exchange. But they were relegated from the nysc after their stock price fell below a dollar per share and held there for over 270 days citadel and many other hedge funds obviously created billions of synthetic shares in these companies and seller boxed them or shorted them effectively into bankruptcy and offered.

The stock exchange while citadel was shorting these companies and creating billions of synthetic shares they were also holding the underlying stock as well and i imagine over the years have steadily been building their position in these zombie companies citadel. Likely. Holds billions and billions of shares in all of these individual pink sheet companies that trade on the over the counter market. And therefore can't be accessed by retail investors.

When citadel needs additional liquidity to meet their margin calls or to meet their margin requirements they pump some of these zombie stocks therefore increasing the share price therefore increasing their overall holding value one perfect example of this is gamestop's old shorted or d. Listed. Baby. Company.

That sold apple products called simply incorporated four days ago. On the 7th of july 2021. This stock ran over 25 000. In a single day from one cent per share.

Although up to three dollars and seventy five cents here. We can see the chart and somewhere around ten o'clock in the morning. This stock was only worth one cent per share. Obviously as the day.

Progressed towards the lunch time this stock increased by 25. 000. Percent to 375. In a singular day and obviously.

This stock is traded on the otc market and therefore can't be accessed by retail investors and the trading in this stock is very very thin aka. There's minimal liquidity. Therefore. It was very easy for market makers.

Or hedge. Funds like citadel to pump the value of this stock up. Therefore giving it a market cap of over 63 million dollars in the space of a few hours. Now.

The reason. Why citadel are using this to only temporarily avoid bankruptcy is because there's only a certain amount that they can pump these zombie stocks before they can't pump them any longer. If the pumping of these zombie stocks becomes too obvious. Other hedge funds are going to turn around and start shorting these companies back down to where they came from therefore wiping out any of the pumped margin gains.

If we have a look at this simply incorporated stock now a few. Days later while the stock did run up to 375 or 355 cents on google. It's now since already been pushed back down to only 15 cents per share the market cap failed now only three million dollars and therefore any gains that citadel made in terms of their margin requirements have effectively been already wiped out in only a few days as citadel and other hedge funds pump more and more of these zombie stocks other hedge funds become alerted to it and short these zombie stocks straight back down effectively wiping out those margin gains. While citadel.

Do have thousands of securities that they can pump this list is available for all to see and i'm sure. Many hedge funds were already reviewing this list of companies that citadel has the opportunity to pump and is also waiting to pounce and short them straight back down and guys. If you haven't already be sure to sign up to moomoos in the link in the description below to get 10 free stocks worth up to 2 500. Each.

That's a total of up to 25 000. And a guaranteed free share of lucid on top of that memory is very easy to use it's incredibly customizable they've got tons of technical indicators and advanced charting tools from moomoo's latest customer agreement they officially state they do not benefit from your order. Flow and they do not sell your order flow to market makers like citadel or to clearing houses. Like apex clearing moomoo.

Actually clears your trades themselves through their own clearing. Broker futo incorporated. Which does also not sell your order. Flow and speaking of being ready to pounce you've probably already seen this tweet from adam aaron saying.

I keep getting asked when pounce know this one is that i always keep my word two. I've said publicly accounts would not happen before the second quarter 2022. Earnings are actually announced and number three the press release issue today that quarter two earnings is to be announced on thursday august 4th. And therefore you can all read between those lines.

Now some have actually speculated what this pouncing from adam aaron is likely to be and many people have decided this pounce could be a merger or potential takeover of amc from one of the big streaming platforms like netflix or amazon. Now you may see okay they're pounced as a merger. So what how exactly does that help the apes and how exactly does that help amc this post on reddit says well allow me to explain in the case of a merger. The companies in question will have their shares recalled and new shares will be issued to the legitimate holders of the new issuing company or the taking over company aka netflix or amazon.

When the takeover happens your amc shares if you are still holding them at that time will be replaced with shares in amazon or in netflix. And it says now unfortunately for legitimate short positions. Those do actually stay on the books. And get transferred over to the new stock aka.

Anyone shorting amc will have their shares also converted and they'll now be shorting amazon or netflix. However naked shorts are an entirely different story. Naked shorts. And felt delivers have to all be bought back or bought in before the new shares can be issued.

Obviously netflix aren't going to issue shares to those holding synthetic amc shares because it doesn't work like that and therefore the synthetics need to be bought back before the new shares are issued the legitimate holders of the old stock have to actually have those shares on hand and have real shares not just ious and not just synthetic shares to be turned in otherwise things get messy real fast and therefore. If on august 4th. Amc. Do announce a profitable quarter and also announce a potential takeover by one of the streaming platforms.

When the takeover does happen those shares will be recalled. The synthetics will be brought back causing the squeeze. And then a few days. Later the shares will be transferred into the new issuing company or the new taking over company.

If you're still. Holding your amc shares at that point after the squeeze. Obviously. There's absolutely nothing that stops you from selling during the squeeze.

When the synthetics are brought back before the new shares are issued. But i also wanted to talk about what adam aaron can do and what adam aaron ca. N't do you may have seen this tweet from astro. Saying.

He's losing faith in amc. And believes there needs to be some accountability of those who are supposed to maintain and better accompany if the can is kicked by him again in terms of actually doing something. He said. He's moving on now.

I think what adam aaron can do is improving better amc as a company. He can diversify business direction and diversify revenue into gold mining or selling popcorn in stores. He can go with the times and improve technology to accept cryptocurrency and issue. Nfts.

Adam aaron can try a variety of different ideas. Such as merging with different companies. Issuing new shares performing share buybacks. Issuing dividends when the company is profitable and more things like that that improve amc as a company.

But what adam aaron can't do is adam aaron can't control. The sec. He can't control the dtcc he most certainly can't control. The department of justice or the fbi or the fed and he can't control these billionaire short sellers that can basically get away with anything because of the connections that they have in the market.

Adam aaron can't control this cable with billionaire short sellers that are in bed. With the sec and the dtcc adam aaron ca. N't say sec dtcc and department of justice. Do your job because i'm controlling you after all adam aaron is only the ceo of a movie theater chain over at amc.

Adam aaron isn't the president of the united states and the chair of the federal reserve and the head of the department of justice therefore making any decision he so wishes adam aaron likely doesn't have ken griffin and gary gensler on his payroll. Paying ken and gary to do exactly what adam wants. Therefore adam aaron can try his absolute best to improve amc as a company. But what adam aaron can't do is control.

Ken griffin. Control. The sec. The dtcc and the department of justice and much more now something that is very interesting about the gamestop stock split is that the split will instantly multiply the number of filter delivers by four and the number of fees charged for these filter delivers this tweet.

Said. If you had 1 million shorts or 1 million. Ftds. After the stock split by dividend.

You now have 4 million shorts and 4 million ftds. The nscc cost after 30 days would have been three million dollars. Now it's going to be 12 million dollars. And that means that short hedge funds are going to be squeezed.

Some. More and closer and closer to those margin calls this screenshot shows a guide to the 2022 nscc fee schedule we can see that for continuous net settlement a fail to deliver on that cns is a 025 and a 300 fee there's a 025 fee per item or per share short in cns for 1 to 30 days at the close of business and a 300 fee per item or per dollar short in the cns for more than 30 days at the close of business. So i guess. This is a three dollar fee per share shorted in the cns for more than 30 days.

And again this just pushes these shorts. Closer and closer to that margin call position and pushes these funds and market makers like citadel. Closer to that margin call as they're running out of zombie stocks to continue pumping. Finally.

David rosenberg. Asked a rhetorical question saying could this be the first recession bear market that managed to bottom before the recession. Actually even began. He said normally the bottom happens just ahead of the recovery.

I think what he's basically saying is this small recovery in the s p 500. That we've seen over the last week isn't in fact a recovery and it's the crash just getting started as the recession has only really just begun again. I think over the next week or two the s p. 500 is likely to fall back below my line and to continue falling below this 350 area as i said previously i drew this line back in march and april showing the direction of the s p.

500. Sometimes. The market falls below my line and sometimes the market sits above my line. But over the next say three to six months.

The s p. 500 is likely to continue trending downwards following this directional line. But guys be sure to let me know what you think down in the comments. Below and as always guys be sure to ding that notification bell.

Because that way you'll be alerted when i upload a new video cheers.