Something definitely worth tracking — along with outstanding Margin — is Short Interest. The WSJ reported that Nasdaq Short Interest rose this month, as “sellers began to anticipate an interest-rate increase by the Federal Reserve.

For the month through April 15, the number of short-selling positions not yet closed out rose 2.8% to 4,993,345,137 shares, up from 4,855,579,913 in mid-March. The short ratio, or number of days’ average volume represented by the outstanding short positions, rose to 2.9 from 2.6 a month earlier.”

Makes sense — After licking their wounds, the Perma Bears have taken the markets listlessness as a negative. The reality is that after making a low on March 22, the market went too far too fast (The Dow shot up 500 points on 8 days). That made it vulnerable to a pullback:

“Over the period covered by the latest short-interest report, the Nasdaq Composite Index rose 3% — a trend that would have hurt the value of many short positions.

Nevertheless, short sellers are becoming emboldened, after taking a prolonged beating, said Harry Strunk, managing director of Aspen Grove Capital Management, which tracks short sales.

He said the average short portfolio is down about 2.5% for the year, including a 0.5% decline in March. While that performance isn’t great, short sellers are at least happy to see their losses are slowing, compared with a 28.2% drop in the average portfolio in 2003, the worst annual performance in 12 years.”

I need to start charting this regularly . . .

Short Interest Grows as Market Bets on Rate Rise
Portfolio Losses Slow, Down 2.5% This Year; Sellers Pin Hopes on Fed
WALL STREET JOURNAL, April 27, 2004; Page C14,,SB108301216713693809,00.html

Category: Finance

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