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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (29064)	3/21/2005 9:01:34 PM
From: ild	Read Replies (2) \| Respond to of 110194

Bearish Betting On the Big Board Rises to Record Short Interest Climbs 5.1% And Is Up 9.1% for the Year; Some See Return of the Bears By PETER A. MCKAY Staff Reporter of THE WALL STREET JOURNAL March 21, 2005 7:43 p.m. NEW YORK -- Short-selling levels rose sharply on the New York Stock Exchange for a second straight month, reaching a record in what some market watchers say could signal a short-term comeback for bearish investors. For the monthlong period ended March 15, the number of short-selling positions not yet closed out, known as short interest, rose 5.1% to 8.4 billion from 8 billion in mid-February. (Stock exchanges tabulate and release data on short positions around midmonth.) Marketwide, the short ratio, or number of days' average volume represented by the outstanding short positions at the exchange, rose to 5.4 compared with 5.2. 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. Short positions rise in value as stocks fall, and vice versa. Year to date, NYSE short interest is up 9.1%, including a 3.5% rise in mid-February. Shortly after that report, however, the Dow Jones Industrial Average rallied to its high for the year, even flirting with the psychologically important level of 11000. That rally through March 7 likely squeezed many short sellers, whose bets fall in value as the market rises, said Kevin Ward, a research manager at investor-education firm MarketWise.com. Since the high, the Dow has fallen more than 3%, which has probably emboldened many of those same sellers to come back aggressively, Mr. Ward said. "It looks like the same people who had to cover at the highs," he said, referring to the process of unwinding an open short position that has gone down in value. The next Big Board short-interest report is scheduled to appear on April 22 in The Wall Street Journal.