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NYSE Short Interest Declines Modestly By Mid-October As Stock Rally Fizzles

Tyler Durden's picture




 

After sustaining nearly two months of an endless ramp in stocks, driven exclusively by Bernanke's Woods Hole speech indicating that a new liquidity tsunami is coming, short interest at the NYSE has finally come in marginally. As of October 15, total NYSE Group short interest declined by 2%, from 14.3 billion to 14.0 billion shares shorted. Of course, this has coincided with the tapering of the rally, and as incremental indiscriminate squeezing power has been eliminated, so the market appears to have topped. That said, there is an over 1 billion shares delta to get back to LTM lows attained in late 2009, implying that there is likely not much incremental short capacity here, and that any more lower will have to be driven by actual selling of existing positions. Alternatively, another mindless move higher on nothing but liquidity expectations, could force an additional squeeze out of the near record number of shorts.

 

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Mon, 11/01/2010 - 16:59 | 691622 MeTarzanUjane
MeTarzanUjane's picture

I don't know about you but it looks like a modest roll-over event is setting up.

Mon, 11/01/2010 - 17:03 | 691633 AR15AU
AR15AU's picture

Orly was that you covering? 1220 is the magic number.

Mon, 11/01/2010 - 17:29 | 691687 Leo Kolivakis
Leo Kolivakis's picture

Shorts were busy pounding PWER again today. I smell opportunity...

Mon, 11/01/2010 - 17:52 | 691742 ZeroPower
ZeroPower's picture

The 1 bill delta.. thats assuming the old # of shares outstanding no? Likely shares have been issued/bought back to change this..

Mon, 11/01/2010 - 19:38 | 691924 IdiotInvestor2
IdiotInvestor2's picture

My thoughts exactly. Last 15 days have been interesting. I think - without much proof - that the shorts have capitulated. Dips have been bought and rallies have faded. Leaving the market not much changed - slightly higher - in last 15 days. The dip buying seem to be short covering to me, and rally fading seem to be profit taking. And some days have seen pretty big swings.

Nobody wants to be short here going into Fed QE2 announcement/elections, and longs have all the reasons to book profits. Which to me indicates that the move from here will be substantial.  After the events of this week, focus will once again be on economy/forclosuregate, so chances are we see a down move from here.

But what do I know ? I am just an idiot without any powerful machines to do trading on my behalf.

Mon, 11/01/2010 - 23:20 | 692356 UncleFester
UncleFester's picture

You know this is a turning point, nothing more and nothing less.  Do the markets turn up with the paper-Ponzi POMO on steroids, or turn down to better reflect plain-old, vanilla Main Street?  Your guess is as good as Krugman's, but should be ripe for some momentum trades.

I Fester.

Mon, 11/01/2010 - 18:14 | 691777 Minion
Minion's picture

The shorts seem to spike at the market bottoms and fade at the tops. 

Mon, 11/01/2010 - 19:58 | 691964 Cursive
Cursive's picture

any more lower will have to be driven by actual selling of existing positions.

Sure looks that way.  Ambac going BK, commercial RE is crap, housing in the toilet, but I guess the extend and pretend at the banks has delayed the margin calls.  There is a lot of kindling here, just no spark yet.  Yet...

Mon, 11/01/2010 - 20:37 | 692025 ThisIsBob
ThisIsBob's picture

Why is this data two weeks delayed and are there some traders who can get it real time?

Mon, 11/01/2010 - 23:18 | 692351 Grand Supercycle
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WTF

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