NYSE short interest makes new high in August
NEW YORK, Aug 21 (Reuters) -- Short interest on the New
York Stock Exchange, the world's largest equity market, rose to
a record 5.91 billion shares in the month ended August 15, the
Big Board said on Tuesday.
This was an increase of 130.7 million shares from the 5.78
billion shares sold short in the period ended July 13, and
represented 1.7 percent of the total shares traded on the
exchange, the NYSE said. The August 15 month reflects
transactions through August 10.
August is the sixth consecutive month this year in which
short interest has reached a new high, starting with March.
However, as a proportion of shares traded on the NYSE, the
August figure of 1.7 percent is the same as it was in prior
months such as July, June and May.
Moreover, some analysts doubt the utility of relying on
short interest as an indicator of market sentiment.
"I don't use it anymore," said Ricky Harrington, a
technical analyst with Wachovia Securities.
"Short interest is more complicated these days with the
advent of hedging and arbitrage operations (which) are done
more for economic reasons" than to speculate against the
market, he said. "It's hard to separate and define how much (of
short interest) is actually a result" of these operations,
Harrington said.
Better indicators of market sentiment include the amount of
cash held by mutual funds; put-call readings; and advisor
sentiment, or the percentage of advisory services that are
bullish compared to bearish, he said.
About 5 percent of mutual fund assets are now in cash. That
is a bearish indicator because at key market bottoms such as
1987 and 1990, the figure was from 10 to 12 percent, Harrington
said. More cash means funds are in a better position to buy
stocks, he said.
Short sellers opened positions of 100,000 or more shares
for companies including Alliance Imaging Inc. ,
Enterasys Networks Inc. , Flagstar Bancorp Inc. ,
Liberty Media Corp. , Triton PCS Holdings ,
Zimmer Holdings Inc. , Annuity and Life Re Holdings Ltd.
, and Bunge Ltd. .
Short selling is when investors sell borrowed shares with
the hope of buying back the stock at a lower price, returning
the stock and profiting from the difference. If stocks start to
rally, short sellers are often forced to buy back into the
market to reduce losses, propelling prices even higher.
A drop in short interest may indicate some investors
anticipate a rally, while a rise may show some investors expect
a decline in stocks.
The ten biggest short positions held for the August month
were for the following companies: Lucent Technologies Inc.
, Sprint PCS Group , Global Crossing Ltd. ,
Cendant Corp. , Motorola Inc. , AOL Time Warner
Inc. , Nortel Networks Corp. , Rite Aid
Corp. , Vodafone Group Plc , and AT&T Corp.
.
The following is a table of the ten biggest short positions
held for the month ended August 15, ranked in descending order:
COMPANY SHORT POSITION
(in millions)
Lucent Technologies 115.3
Sprint PCS Group 102.5
Global Crossing 94.2
Cendant 89.7
Motorola 72.1
AOL Time Warner 70.3
Nortel Networks 63.9
Rite Aid 60.7
Vodafone Group 54.5
AT&T 54.3
223-6152,
per.jebsen@reuters.com))
REUTERS
Rtr 16:45 08-21-01 |
