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