Diana Containerships shares hit intraday highs of $26.17 today on exceptional volume, in a move very similar to what we’ve seen from DryShips lately (it’s also worth noting that DRYS has been halted indefinitely today while Nasdaq investigates the move).
Today’s intraday high in DCIX is more than ten times the stock’s Monday closing price of $2.41 — an exceptional move to say the least. Investors shouldn’t be surprised if this stock gets halted soon as well, because this type of price action tends to stem from manipulation rather than normal market factors.
While dry shippers like DRYS and DCIX are no strangers to volatility, these are historic moves. It’s also highly unusual that DCIX would continue to rise despite DRYS being halted all day today.
TheStreet.com seems to think that the moves are a result of a massive short squeeze:
DryShips undertook a 1-for-4 reverse split when the stock was trading at $1 a share, then engineered a 1-for-15 reverse split at the start of November. As a result, there were just over 1 million shares of the stock in the public float, opening the door for exactly what’s happened now — a short squeeze of dramatic proportions. According to the website ShortSqueeze.com, 1.7 million shares of DryShips were in short sellers’ hands as of October’s end, up from just about 300,000 shares six months ago.
Whatever the cause, investors are best off avoiding this insanity.