More Bull Ahead...
This month the short interest reports from the various exchanges paint a clear picture of sentiment. Short interest rose 1.54% on the NYSE for a fifth jump in a row:
Short interest rose 1.91% on the NASDAQ in the report released on Tuesday. Short intensity remains at elevated levels. Short intensity jumped in these sectors: technology services, electronic technology, energy minerals, commercial services, finance, utilities, consumer durables, producer manufacturing and retail trade. Short intensity dropped in these sectors: industrial services and non-energy minerals.
Average short intensity is our measure that averages the short intensity of every stock in each sector. We now have 15 sectors (out of 18) with average short intensity above 45%. Last month, we had 13 sectors above 45%. However there were only 4 sectors above 50% last month - this month we have 7, with consumer durables soaring over 55%.
With the short interest data in from the NASDAQ, it is clear that technology issues are heavily shorted:
The above chart shows the NASDAQ 100 index with our average short intensity for the electronic technology sector. The average short rank (52.94%) is now at the highest level since its 4/28/03 peak of 53.21. That last peak saw the NASDAQ 100 index rise 43% from 1085.06 to 1553.62 (by 1/16/04), driving the average short intensity back down to the 40% level. A similar move now would take the NASDAQ 100 index to roughly 2200. There is no guarantee that the NASDAQ will jump this far, but it is interesting that the NASDAQ 100 had significant jumps the last two times (see arrows) short intensity was this heavy in electronic technology.
Moreover, the current heavier level of negative betting did not require a lower low in the weekly price pattern. It is usually a recipe for higher prices when a market can drop less while at the same time create more bears. Things that make you go hmmm!
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