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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (22968)	8/22/2002 5:57:33 AM
From: EL KABONG!!!	Respond to of 74559

I have a third possible explanation. Perhaps the same hand that is playing with the price of gold is now playing with the prices of stocks... online.wsj.com Short Interest on NYSE Jumps Despite Stock-Market Recovery By PETER A. MCKAY Staff Reporter of THE WALL STREET JOURNAL Short interest leapt to a record at the New York Stock Exchange this month. The number of short-selling positions not yet closed out rose 7% to 8,079,414,124 shares in the month through Aug. 15 -- up from 7,554,090,306 shares July 15. The increase came even though the Dow Jones Industrial Average edged up 1.5% during the same period. It is rare for both the market and short interest to rise simultaneously, since short interest is usually considered a barometer of bearish investor sentiment. Investors who sell securities "short" borrow stock and sell it, betting the stock's price will fall, and they will be able to buy the shares back later at a lower price for return to the lender. Short interest often is considered an indication of the level of skepticism in the market. Short interest reflects the number of shares that have yet to be repurchased to give back to lenders. In general, the higher the short interest, the more people are expecting a downturn. Some investors will allocate part of their portfolio to a professional short seller to hedge their assets in case the market falls. Investors also may rely on short selling for other purposes, including a hedging strategy related to corporate mergers and acquisitions, hedging convertible securities and options, or tax-related reasons. Generally, analysts say at least one of two scenarios must play out for short interest to rise in unison with the stock market, as it has this month. One such scenario is that short investors bet so aggressively during the market's dips that, even when the market eventually recovers, short interest can't catch up. The other scenario is that there could be more investors using short positions to hedge as they buy stocks for cash. The next NYSE short-interest report will be published in The Wall Street Journal on Sept. 20. Write to Peter A. McKay at peter.mckay@wsj.com Updated August 22, 2002 KJC