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Strategies & Market Trends : ahhaha's ahs

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To: GraceZ who wrote (2516)	6/23/2001 1:58:35 PM
From: ahhaha	Read Replies (3) of 24758

Historically the short interest expands until it reaches a peak with price and then declines with price. Much of the short interest is structural which means it's related to hedging activity and so may not be so well-correlated with price. A hedge is usually somewhat price indifferent, but if the time wasting component fully wastes due to boring, the short interest would decline without commensurate decline in price. In the past the only event that could get significant short covering to occur in a short period of time was some unusual FED action. The FED has pumped continuously one way or the other since 1994. They've worn out their relevance. It's hard to imagine any FED action which would encourage a significant short covering. It's hard to imagine any action at all which would. Short interest would decline if we had a protracted period of low volatility, low activity, gradually declining, stock market. Such a period would drive away speculation, ruin discounters dependent on turnover, disenchant the retirement obsessed public, and take the stock market through a period of extended boring. Few believe in this scenario. It seems to fit the structural factors in place now though and denies COLLAPSE.

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