Re: Short Interest
Much of the significance of the short interest has to be discounted due to the DEC merger situation. A very large amount of DEC shares (my recollection is that DEC has over 150 million shares outstanding) have been bought by arbitragers who simultaneously sold CPQ short. The spread in favor of this arbitrage is till about $1 (down from $3-4 a few weeks ago). When the merger goes through the arbs will simply deliver the CPQ stock they receive from the merger back to the brokers or other institutions they borrowed from, with little or no effect on the market. Short interest will decline substantially after the merger goes through.
In a bull market, I regard high short interest as bullish, as shorts rush to cover when the market goes up. But I'm not especially bullish right now -- lousy action by tech stocks generally, Asia situation yet to work itself out, high valuations, Fed threats to raise interest rates, etc. In my previous post (#26299), I projected that CPQ would fall to support around 28, where it is today. If 28 fails, we will probably see 24 again.
Charlie. |
