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Short Interest Drops


Better late than never, eh?


NYSE short interest for the period between mid-August and mid-July dropped 0.27%. NASDAQ short interest also declined (-0.16%). Boo's crew mostly took a break this month.

The graph I've been using appears below. It uses January 2003 as an index year (for no reason than that was a complete year bull market and the first year where I collected data. I'm not certain the graph is anything more than informational, but I think it is worth pointing out the pattern of the indexed NADSAQ Comp (in dark blue) after each time it was eclipsed by the indexed value of the NASDAQ short interest (light blue).

For the first time since May and for only the third time this year, 155 stocks in the NASDAQ Biotech Index (NBI) dropped (-2.36%). Two companies dropped off this list during this period, but the average short interest also dropped during the month. Short interest of the NBI as a percentage of overall NASDAQ short interest is now at 11.56%, down slightly from last month's 11.84% for the second drop in this measure in as many months. The decrease in biotech short interest came in the face of an overall up move in the NBI of 3.41%, the third straight month-over-month gain..

Beginning in May, I started tracking short interest in biotechnology stocks that ended up on the Regulation SHO Category A and B lists (read more about this here). These stocks were selected because they were members of the NASDAQ Biotech Index (NBI) at the time the SHO Part Two rule was initiated. Short interest in these stocks decreased in the last measurement period by -1.65%. However, the average short interest increased by 0.11%. This discrepancy is likely caused by the removal of Vicuron during the measurement period. If one looks at the average short interest measurement, it has increased in this subpopulation every month since Reg. SHO went into effect despite two down months in the overall biotech sector in the same period.

Short interest in the IBB, the iShare ETF for the NASDAQ Biotech Index (NBI), declined 1.39% to 8.49M shares last month. This is the third straight monthly drop. The BBH, a HOLDr ETF approximating the AMEX Biotech Index, saw short interest increase 7.63% to 3M shares, breaking a string of five straight monthly drops.

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