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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: rocklobster who wrote (48817)	3/12/2001 7:48:22 AM
From: Rande Is	Read Replies (1) \| Respond to of 57584

. . . common sense that more people are margined long at these low points than were margined long at the top. and anyway, long interest has alway vastly outnumbered short interest.. I don't think that it logically plays out the way you think, Rock. Just because margin debt is at an all-time high, does not necessarily mean that long-interest is at an all-time high. In fact, this figure cannot be used for computing long-interest. It is anybody's guess. And Wall Street keeps daily short-interest figures a closely guarded secret among the brokers, market makers and other insiders. So all we can use to make this calculation is figures on short-interest from last month. If I were to estimate what margin interest is made up of these days, I would figure that those who play mostly short are fully margined. Those who suffered the largest losses have either had their margin accounts closed or they have moved to the sidelines to wait it out and decide what to do. Those who play both ways are managing just fine and probably are playing the same way now as they have always played. What I cannot imagine is that those who suffered tremendous losses by staying margined are still sitting there with high margin percentages and sending in money to their brokers every few days to support their margined positions. That just doesn't make sense. So again, I see the similarities of today and to the market top back in March, 2000. when most long traders were fully margined and confident. Only I think that the margin interest we see now leans far heavier on the short side than it did in March of 2000. The difference between my opinion and yours is that I assume that the majority of the small investors are playing the WRONG way. There is an indicator that is used for picking bottoms at times like this. Perhaps someone can link to it somewhere. It measures the odd-lot short-interest. When the moms and pops short stocks, many of them tend to do so with not so much money, hence they cannot afford to buy round lots of 100. So Wall Street watches this figure carefully as a sign of capitulation. However, I had some other thoughts overnight regarding capitulation, which I will share in another post. Rande Is