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Short Interest Spike Presages Furious Sell-Off and Rally
Posted By Barry Ritholtz On October 21, 2005 @ 12:03 pm In Psychology,Technical Analysis,Trading | Comments Disabled
For nimble traders only: The last time the New York Stock Exchange short interest ratio broke below a key trendline, the U.S. equity market had a short and sharp selloff — one that was later followed by a major upside blow-off
The gray area on the chart is SPX; Blue line is NYSE short interest:
Panzner, Rabo Securities USA
On the basis of monthly short interest data for the period ending October 14th (released yesterday by the NYSE) and average daily volume for the first two weeks of the month, the most recent SI reported works out to approximately 4.74 days.
That is the lowest level since January 2004. This places a measure below a major uptrend dating back to the September 2001 lows.
Panzner asks: "Time for deja vu all over again?"
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