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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: CYBERKEN who wrote (14681)	9/30/2002 11:01:25 PM
From: sentimentrader	Respond to of 19219

I would agree for the most part, although there is one long-term indicator that has been fairly good at remaining bullish or bearish during extended trends - short interest. Short interest is the total amount of shares sold short and not yet covered on each exchange that reports it. While it's been hitting record levels, it is not nearly as bullish on a normalized basis. I don't believe you can use short interest in the mainstream sense (especially the short interest ratio), since short interest and volume (if you calculate a short interest ratio) both exhibit seasonal tendencies. From 1943-2002, January has consistently shown a short interest reading 90% that of the rest of the year, while December runs about 112% of average. I normalized both short interest and volume to come up with a modified ratio, and that is a much truer reflection of actual sentiment. This modified ratio is neutral at the moment on the NYSE, but is becoming quite bullish on the Nasdaq. This is one indicator that remained correctly bullish throughout the mid-1990s before hitting truly historic bearish levels right before the market peak. We're still recovering from those levels. sentimentrader.com