Fannie Mae (FNMA)

[obiterdictum]

The difference is between short sales and short interest.

Short sales indicates the number of shares borrowed and sold short. There is no indication in these numbers, however, of how many of the short sales remain open. That is, how many shares need to be purchased to close the short sale (i.e. at a lower price to make a profit or at some higher price than purchased to avoid losing a great deal of money).

See this video on short selling: http://www.investopedia.com/terms/s/shortsale.asp.

The value of short sales numbers is knowing the amount of trade that anticipates and looks for drops in share prices versus those looking for price increases.

Short interest indicates the number of shares borrowed, sold short and but not yet covered or closed out by a particular date. See: http://www.finra.org/industry/short-interest/short-interest-reporting-due-dates

Short interest numbers indicate that there is some degree of anticipation by traders making a short sale that share price will drop and that there will be buying pressure exerted at some time. Not closing out the short sale indicates an anticipation of lower prices.

Days to cover or short interest ratio indicates number of days that may be required to close out all of the short positions. Days to cover indicates the probable ease and speed of being able to cover all of the short sales that are not closed. The higher the number of days to cover indicates the short sale can be covered less and less easily while increasing buying pressure.

it is not only MMs reporting but also all of the equity firms, brokers, etc. that have sold short or provided shares to be sold short by individual traders.

A short squeeze can occur when short interest numbers and days to cover numbers are high and a positive event is looming or actually occurs. The positive event can cause the price to increase above the short sellers purchase price. This can stimulate some short sellers to purchase shares at the price they sold or higher to return what they borrowed and to avoid losses that can be unlimited in amount. In doing so, short sellers can drive the share price higher and higher as they purchase shares to close out short sales to avoid losses.

This process is the opposite of those buying low and selling high to gain profits and thereby increase the selling price and/or selling at or below the purchase price to avoid losses while driving the price down.

The value is knowing the approximate extent of open short positions, buying pressure to close pose position, the potential occurrence of short squeezes of different magnitudes timed with positive events and other short term indications of future price direction.

Additional Definitional Resource:
http://www.nasdaq.com/quotes/short-interest.aspx