The science of trading market momentum for stocks, options, futures and bonds. Our critical day analysis is all about trend reversals. There are substantial risks with short selling, some of which can be avoided through education on the process.
Short interest is a measure of the total share volume that is currently short the stock.
When a person short sells, the order must be identified as a short sale and these statistics are kept for each stock by the exchange. Short interest can be a source of demand if buyers become enthusiastic for the stock and price rises prompting some short sellers to reduce risk by buying back stock to replace and closing the short position. A short interest ratio is found in several newspapers and databanks and is a calculation of the latest reported short interest positions for the month divided by the daily average trading volume. A high ratio is considered bullish while a low ratio is considered bearish. A ratio of 2 is considered 2 days potential buying power.