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Educational Post: "Short Interest"

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trader53 Member Level  Saturday, 06/02/12 05:56:41 AM
Re: trader53 post# 1151
Post # of 119454 
Educational Post: "Short Interest"

Go to:

They give the information to you automatically
when you input a certain penny stock’s symbol.
"Short Interest" is only calculated twice a month in stocks.

Short Interest Percentage Change:
You should Buy stocks,
where the Percentage Change in the Short Interest
increases dramatically from one month to the next.

Example #1: SUGO

Date ________Short Interest __% Change Avg. __Daily Share Volume

Nov 15, 2010 ____29,584 _________8,072.38% __________150,704

Oct 29, 2010 ____362 ____________100.00% ______205,680

Example #2: SUGO

Date ________Short Interest % Change Avg. Daily Share Volume

Feb 15, 2012 ___103,097 _______117,055.68% ___19,185,963

Jan 31, 2012 ___88 ____________100.00 _______21,481,698

Dec 15, 2011 ___0 ____________-100.00 ________6,370,973

Nov 30, 2011 ___16,908 ________100.00 ________4,170,886

Nov 15, 2011 ___0 ____________-100.00 __________670,468

"Short Interest": What It Tells Us

Short interest is the total number of shares of a particular stock
that have been sold short by investors
but, have not yet been covered or closed out.

When expressed as a percentage,
Short Interest is the number of shorted shares
divided by the number of shares outstanding.

Short Interest serves as a market-sentiment indicator.

A large increase, or, decrease in a stock's Short Interest
from the previous month

can be a very telling indicator of investor sentiment.

Let's say that Microsoft's short interest
increased by 10% in one month.
This means that there was a 10% increase
in the number of people
who believe the stock price will decrease.

Many contrarian investors use Short Interest as a tool
to determine the direction of the market.

The rationale is that if everyone is selling,
then the stock is already at its low
and can only move up.

Short Squeeze

A short squeeze occurs when
short sellers are scrambling to replace their borrowed stock,
thereby increasing demand and decreasing supply,
forcing prices up.
Short squeezes tend to occur more often in smaller cap stocks.

If a stock has a high short interest,
short positions may be forced to liquidate
and cover their position by purchasing the stock.
If a short squeeze occurs
and enough short sellers buy back the stock,
the price could go even higher.

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