Short Interest Is Up 55%

Could this be some sort of bubble?

Record bets against U.S. stocks may mean the market is on the verge of a rebound fueled by purchases of shares that were sold short, according to JPMorgan Chase & Co.
So-called short interest on the New York Stock Exchange has risen 55 percent this year to a record 3.6 percent of listed shares, JPMorgan Chief Equity Strategist Thomas J. Lee wrote in a report today. In a short sale, an investor sells borrowed shares in anticipation of being able to buy them back later, or “cover,” at a lower price.
Given the “extreme levels” of short interest, positive catalysts for the market “could trigger a substantial short- covering rally,” New York-based Lee wrote.

The article notes that 36% of companies in the S&P 500 have at least 5% of their shares sold short.

Posted by on July 7th, 2008 at 12:16 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.