Welcome back to the channel everyone today, i want to talk about how short exempt shares could cause amc to rocket. I'm also, obviously going to explain what short exempt shares actually are and how they interact with the failure delivers. Trust me guys you do not want to miss this video, so stay tuned and let's make some money, but guys before i dive into the video. I just want to give a massive shout out to the 2 200 of you that have currently ding that notification bell, because you guys are always the first to watch a new video as soon as it's released so guys be sure to drop a like down below Subscribe to the channel and ding that notification bell, if you haven't already so that you don't miss another video, just like this one and now i want to dive straight in with the key information.

So what is short exempt? First, you need to know the role of a market maker. A market maker or mm is an organization that facilitates highly liquid or automatic stock trading by accepting trades on behalf of investors, what happens is when you send a buy order? The market maker automatically accepts your purchase by taking the other side of the trade they do this by either selling a share to you directly or by shorting the stock, as in selling one of the shares that they own or they go out and locate a stock And short it effectively to you, then the market maker goes into the market and finds a seller at a better price and they profit the difference which is called the spread now, realistically, we know this spread should be fractions of a penny, but there's also a lot Of market makers out there like citadel, that have been fined fairly small amounts of money for not giving their customers the best price and actually profiting way more than they really should be the narrower the spread, the less they make per trade, but the narrower the spread. The more volume they tend to get, which means more profit - hence they tend to favor high volume trading short exempt or short x, is a special case where market makers such as citadel, are permitted to naked, shorter stock short without locating or borrowing a share and are Granted a special exception to locate and deliver the failure to deliver that gets created in the process within t plus six settlement days. Failure to close the resulting failed to deliver by the t, plus six settlement date in theory, forces the market maker to no longer be permitted to short of stock.

But realistically we know that after five days they end up on the fail to deliver list. It then carries on for 13 days total and then somehow gets magically transferred to another market maker. So therefore, short exempt is a special type of short reserved for market makers in a supreme stroke of stupidity by the sec when they wrote regulation sho, they created an exception for market makers to create a short when deemed necessary in order to satisfy market-making requirements. The current regulation allows for a comparatively small number of restrictions and, within those restrictions, are an even smaller fraction of exemptions to that rule.

These exemptions are intended to allow brokers to best serve their customers in panicked markets best serve their customers or best serve themselves. I wonder: that's pretty vague, so let me break it down further. A short exempt is a share sold short by a market maker in extreme circumstances where the following are true: there's no shares available to borrow meaning it can be naked. Shorted there's widespread panic buying in the market as in a short squeeze.

The stock is on the short sale restriction list and the market maker deems it necessary. How do they deem it necessary? Who knows? The market maker gets to side the link between short exempts and filter delivers. Well, i dug into regulation xho even further, and i found evidence of a correlation between short exempts and filter delivers. That will give you an urge to set fire to the stock exchange.

A broker or dealer may not accept a short sale order in equity security from another person or affect the short sale in an equity security for its own account. Unless the broker or dealer has a borrowed the security or entered into a bona fide arrangement, to borrow the security or b reasonable grounds to believe that the security can be borrowed so that it can be delivered on the delivery date is due. This is known as the locate requirement market makers engaged in bonafide market making in the security at the time they affect the short sale are exempt from this requirement. So, what's all of this in situations where a market maker or broker dealer is unable to purchase a security, they're permitted to borrow another share in order to close out a fail to deliver, but market makers are actually exempt from the locate requirement and are allowed to Borrow a share that doesn't exist in order to satisfy that same fail to deliver.

There's a notable pricing trend where every time there's a long series of failed delivers. It's followed by a six day period of elevating short exempts. This is indicative of the market. Maker's t plus six settlement cycle, where they're covering cumulative filter delivers on a rolling t plus six cycle which is being covered through naked shorts.

In other words, another fail to deliver. It's worth noting that a lot of the times when you have one of these yellow bars, which is the fail to deliver it's often always followed by bigger black bars, which are the short exempt shares, especially here around june. When you have the failed, delivers and then way more black bars, which are the short exempt shares being created, so let me put that more simply: they can cover a fail to deliver, buy naked shorting, which is just another fail to deliver. So not only can they actually transfer their felt delivers from one market maker to another market maker, but they can also create their own shares by naked shorting in order to cover the first failed to deliver.

So what indicators can we look out for before the price is expected to run up massively and felt delivers are expected to be off the chart? Well, with normal trading, we should see short exempt shares going down, utilization should be below 85 percent, and price should be moving according to sentiment, volume and balanced, buying and selling, which obviously is not happening at the moment. High actual legit shorting should be high new shorts short exemption should be low of the new short volume because it should be normal market making. Activity utilization should be above 85 and the price should be moving down, but with high naked shorting. We should see short exempts up over 10 of new short volume utilization above 95 percent price moving down quite rapidly, and this results in failed, delivers, t plus three for brokers and t plus six for mms, unless real shares are brought and delivered fail to deliver is Being covered with more naked shorts short exempts would be up, utilization would be over 99 filter delivers, would magically disappear, price moves up and it indicates the filter, delivers, are being forcefully delivered.

Rip incoming the rip huge spike in filter delivers massive price movement upwards. Excessive short exempts, due to the market makers scrambling to several trades, more naked shorts utilization tanks, new shorts, low short exempts high the crash post squeeze massive short, exempts far surprise failed, delivers filter delivers disappear because they begin a new settlement cycle with the dtcc. So look out for fail to deliver spikes in t-plus, 21 and obviously the price craters. Somehow the felted delivers disappeared.

The day before amc was about to be placed into full settlement due to having been on the threshold securities list for 12 consecutive days. The short exempts went through the roof and have been going above 3 million through all of last week. We've got a brand new parabolic pattern. The parabolic arc, which i spoke about in my previous videos, which is perhaps one of the rarest and most extreme ball patterns on a stock that exists and we're about to hit yet another t, plus 21 settlement cycle from the original filter, deliver spike on june 18.

That began amc's placement on the threshold securities list for having over 0.5 percent of its flow failed to deliver, and every friday it spent above 60 was another day that millions of call options expired in the money and were being exercised on mass. I think amc is about to go and go on the rep. Again. We saw amc recover significantly from its dip today from 32 up to 35 before settling again, the shorts are piling on, but she's fighting back and hanging tough, i'm looking for the following triggers short exempts to spike over five million consecutively for five days.

Utilization maxed out above 95 percent and a two to three day, maybe 45 day. In my opinion, consecutive sharp price increase of plus 5 at the close, remembering the black bars of short exempt volume. We can see a few high bars here before it exploded in january. In june again, a few high bars here before another explosion as the price ran up, and here we are in july with another few high bars.

Looking at the most recent few days from the 19th to the 23rd, we can see the short exempt. Volume has been nearly 2 million shares for a few days, but then did fall under a million shares per day, but it's also really important to remember that this data is incomplete, as the short volume on this chart is only 40 of the total market data, because Most trading facilities don't report it accurately and not all trading facilities, report short exempt separately from the total short data. For this reason, the actual short exempts may be significantly higher. So the following is the conservative floor estimate, so we're currently waiting for the utilization to go up which is going to happen when there's more naked, shorting and fair delivers being covered with additional naked shorts.

It's also really important to remember the sheer size of the current dark pool volume. The point of this observation is that market makers are desperately trying to keep up with the demand for amc and they're almost totally out of supply, and we all know what happens when there's an outrageous demand for something with no supply, they create shares and naked sure. More specifically, what happens if suddenly, there's no shares to borrow short exempt, skyrocket, further delivers skyrocket and the price is forced to rise once they go over the edge. This is what's going to happen when utilization hits 100 market makers are going to run out of shares to borrow if they cannot borrow, they must buy shares.

If they cannot buy shares at a lower price, they must take a short exempt short exempts result in an immediate fail to deliver that they must close by t plus six. If market makers have outstanding further delivers by t plus six they're forcibly restricted from shorting by the sec, if the market makers are restricted from shorting, they must buy shares at the market price for a loss. If the market makers are forced to buy shares at the market price and the market dries up, then they're forced to post a buy order for any available share at any available price. If, while this is happening, the market, maker's liquidity dries up, they'll be forced to ask their bank for a loan or the federal reserve for a repurchase agreement, a repo agreement or what i covered yesterday.

Maybe they'll enter into an agreement to loan out their long positions. In return for cash to be able to use that cash as liquidity and, finally, if the bank denies the market make of their loan or they run out of long positions to loan out or if the bank determines that existing loans have become too risky. This results in defaults, seizures bankruptcy and a market-wide collapse. This is exactly why the dtcc are trying to put in place that process of being able to loan out their long positions for cash to users, liquidity, key takeaways and what the apes can do to help hold stronger than ever.

Everyone needs to get their stocks off payment for order flow platforms, disable stock lending in all brokerages use, direct market orders to the new york stock exchange or nasdaq for all stock purchases and finally spread. The word guys be sure to let me know down in the comments below what you think about these short exempt shares and how they interact with felted delivers and how, when the short exempts rise massively and the failed delivers crash, because they're being forced to buy shares. What do you think is going to happen? Also guys if you want to pick up some shares in mc, but you haven't even yet signed up to a trading platform, be sure to sign up with fidelity because they don't sell their order flow into the dark pool. But guys if you want to buy some shares in any other company, whether it's apple, amazon, netflix or anything else, be sure to sign up to weeble, if you're in the us, using the link in the description below to get some free shares.

If you're in the uk there's a link in the description below to free trade, where you can also get some free shares and as always guys if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted when i upload a new video cheers.