HI Steve; You correct both ways, short interest does not mean one
has a bearish position..I'v been saying that using other words.
And yes the insiders short all the time, the rules be dammed, you
always have a bother in law or a good friend can trust, the fact
you have the optoins makes it safe for you to sell short, not
just to lock in profits, but you can also make a few bucks if your
willing to buy back on the dips.
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Short interest can be read..( not 100% reliable but very close )
I have two major paper portfolis I'm tracking..and still checking
the results , I'v not finnished but it's clear it's not "just"
the amount of short interest ( yet it must be considerable )
I'm travking stocks that "always" maitain a percentage..some of
it never seems to cover..the thing is not to read in all the whys
just the primary one "insiders, and underwriters" short the most.
The main read is the "change, and rate of change" in the short
intersest, and read that in respect as to what happened to the
price of "that" stock, as each one has it's own personality.
The rule of thumb is "if" the short intrest "FALLS" a lot, then
a lot of people covered, then looking at the price you ask did
they cover on a dip..OR were they forced out causing a spike
if they were forced out causing a spike..and she hasn't droped yet
you have a good short position, their blood becomes an assest,
but only if you "know" that spike was caused by short covering,
and not just guess at it like the news pundats.
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On the other hand, a big increase in short interest ..sometimes
caused by bad news..however the stock has not really fell..
what happened..( the insiders may have put out the bad news to get people to short..they may even covering some old short positions,
and as soon as the shorting stops..they then buy to trap in the
( short on bad news guys ) and set up a squezz..you spot this
with a dramatic increase in short positions, while the stock is
on it's low end of the trading range but with out much more price
drop, all in all big increasing in short interest with out the
price droping relitive to the percentage..you got a stock that's
subject to GAP up. The news pundits may say o such and such
happened and new buyers came in..when it was nothing but shorts
getting toasted..so the hell with the motives..is it incresing,
or falling..and what did the price do when it changed.
I scan for 10% of better change in short interest 20% is better,
with at least 10% of the stock shorted, my data is old when I
get it so I have to extrapolate..and do some guessing..but of the
ones I'm tracking most 80% have moved the way I pegged them. Being
I'v not been at this sort of tracking for very long, I have a few
reservations, but let there be no doubt..if you see a 20% fall off
in short interset and a stock just spiked..and is still hanging
buy some puts as you got a winner.
Jim
I'm not recomending these as I'v been in them already and coming
in now could be late..but I posted them when I bought.
Back track my profile and you will see when
PZL puts, ADCT puts, CYRX calls, ADBE calls. they have not moved
enough to do me a lot of good yet..but every one has moved my way.
I could get clobbered with CYRX as she give out eanings on the
16th, and the day before I may take out a little insurance with
aa few puts, but like AMD..even if the news is bad , it will have
to be real bad..as CYRX has "to many" shorts out, it's not likley
half of them can cover with out sending her up ! ;-)
They were drooling at the lips thinking the bad news from AMD would
send her down, one even went so far as to say $16, ( hopefully
wishing ) what did she do..up another 1/2 ...wait till it gets
painfull ..she will gap up, but that could be in August..and does
depend on this coming report not killing her enough to let them
off the hook..in short I bet aginst the shorts..calls when they
are peaking, and puts after they have covered, ( if it caused a
spike ) I won't have new data on AOL till friday..so all bets
are off on her till after I get to see it. Last week was 16M
short..if this week it has droped to say 12M..and she is still
hanging high, I'l know what a lot of that gain was about, and will
then buy a basket of puts, if the short interest is up..to say
18m o, my look out for 70 or more..
Jim |
