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Short interest data mixed in January




Short interest for the period between mid-December and mid-January was mixed for the two major markets. On the NASDAQ, short interest declined by a little over 1%. Three of the last six reporting periods have seen a decline in short interest volume on the NASDAQ. NYSE short interest declined, breaking what turned out to be a revised three-month increase in short interest. It appears someone forgot to report a several million share short position in GE (GE) in the last reporting period. Prices of composite indexes for both exchanges declined during the same period

The traditional graph I have used appears below. It uses January 2003 as an index year (for no reason other than that was a complete year bull market and the first year data I collected).

I've compiled two other graphs. They use the same data, but one is for 2003 and the other is for 2004. You might find them interesting.

For 2003, short interest in the NYSE dropped as that index rose. For the NASDAQ, the two sides seemed to go on about their merry way, rather oblivious of each other. The gain in price outstripped the gain in short interest, but neither gain was what you would call sleepy.

For 2004... well, I'm not sure what to make of that chart. I find it interesting that the NASDAQ did worse than in 2003, but short interest gains were less. On the NYSE, it is apparent short sellers tried to assert themselves by running up short interest faster than the market gains - a tactic that failed miserably in the last quarter of the year. Bears ran out of money before the bulls did.

Back in my home sector, of the 23 companies in our coverage universe, 12 saw their short interest decline. This was the same count as last month, but whereas last month the larger moves were in the short sale increase side, this month the large moves are short sales decreases.

Short interest in the IBB, the iShare ETF for the NASDAQ Biotech Index, rose 8.4%. The BBH, a HOLDr ETF approximating the AMEX Biotech Index, saw short interest gain 6.35%.

The biggest news in shorting is trying to game the impact of the new Regulation SHO. Tomorrow is the big day where short sellers could endure forced buy-ins if a stock they are naked short has existed on the various threshold lists for 13 straight trading days. Brokers and market makers who facilitated naked trades subject to the buy-in are also punished, as they are banned from trading in the name for a short period.

I provided links on the Buzz to the three Threshold Securities lists, but those Minyans who are Buzz-less can find them here:

NASDAQ SHO Threshold Securities List
NYSE SHO Threshold Securities List
AMEX SHO Threshold Securities List

No positions in stocks mentioned.

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