09.29.09
Highly-Shorted Stocks Leading Market: Bad News for Market
Stocks in the S&P 500 with the highest short interest as a percentage of their stock-market float have soared 13.2% since Sept. 2, well above the 6.9% gain for the S&P 500. These stocks include Advanced Micro Devices, MBIA, Wynn Resorts, Gannett and American International Group, all companies with significant business or balance-sheet risk.
See the rest of this article on the Wall Street Journal’s website. When highly-shorted stocks lead the market it is usually a sign of froth and panic buying. I believe that the current market action presages significant market declines. Of course, I am not a market speculator: I am a daytrader (see my day-trading blog ReaperTrades) for whom the direction of the market is not that important, so this will not affect my decisions significantly.
Disclosure: No positions.
Joe Shareholder said,
October 9, 2009 at 11:10 pm
Today Marketwatch reported that short interest is actually down for the big three, NYSE, Nasdaq, s%p. Anyway, not sure why, short interest should be very high now. Fundamentals are terrible.