The Roman philosopher Seneca wasn’t talking about the stock market when he wrote that “T...
Why Following Short Interest in a Stock Is Important
08/20/2009 12:01 am EST
As explained in the Schaeffer’s Investment Research education section, short interest is a useful sentiment indicator that measures the level of investor pessimism toward a stock.
While it isn't always a simple "long-only" indicator, it can give you insight into situations where you might see concentrated buying demand.
The purpose of following these stocks is to highlight heavily-shorted companies that could be in the midst of a potential short-covering rally.
Methodology: The query scans my database of companies, which has some basic filters to eliminate stocks that don't trade frequently.
The table below is a filtered list of stocks from yesterday that have at least 10% of their floats sold short and that showed a gain in the previous trading day.I use this as a tool for finding situations where stocks with heavy short interest have begun to move.
By Nick Perry of Schaeffer’s Trading Floor Blog
Related Articles on STRATEGIES
The Dow Theory was originally referred to as “Dow’s Theory,” since it was based on...
When stocks are selling at valuation extremes and consumer optimism is at one of the highest levels ...
The stock market is still bullish but it’s flashing yellow caution signals that are even brigh...