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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: dvdw© who wrote (14750)10/8/2002 5:35:56 PM
From: Steve Lee  Read Replies (1) of 19219
 
Have I got the following right:

When someone sells a stock short, they borrow it from a long and sell it to another new long. If a stock has 100 shares outstanding, and I short 1 share, then there are now 101 shares held long and 1 held short. There will always be 100 more shares held long than short. Thus you can never get the 1:1 relationship. For every share held short, there is an extra one held long.

If so, then a short covering rally is only ever likely to be a temporary event and nothing that will lead to major strength.
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