Short Interest

NYSE Short Interest Soars To Highest Since July 2009; Is An Epic Squeeze Forming In Bank Of America Shares?

While two weeks ago the notable feature in the NYSE short interest update was that it had grown by a whopping 1 billion shares, or the most in over two years, this week's highlighted feature is that in the second half of August evil "speculators" did not relent in their negative bias, and brought the total NYSE Group short interest to a two year high or 14.9 billion shares, a 484 million share increase from the prior week, and the highest since July 2009 when the market still was unaware that central planning was the name of the game, and being short actually meant taking on the Chief Printing Officer head on (and fewer still realized that being long gold was the only effective way to "fight the Fed"). And just like last week when we speculated that we can "expect some even more furious short covering sprees to send the S&P much higher on an intraday basis" courtesy of this massive short interest overhang (which will without doubt be used by stock custodians to create a rally if and when needed, just like back in March of 2009, by making recalling shorts in every name), the probability of a massive "face off" rally grows as more and more join the ranks of those believing that the US capital market still plays by the rules. Newsflash: it does not. And anyone trading stocks, on either the long or short side, is guaranteed to lose.

NYSE Short Interest Soars By Most Since March 2009 S&P Lows, Highest Shorting Since June 2010

For anyone wondering why the biggest drivers of intraday moves in the stock market are furious short covering squeezes which have led the S&P to have daily fluctuations that make a mockery of the Fed's prerogative for "price stability", here is your answer. On August 15, short interest in the NYSE soared by over 1 billion shares compared to the end of July: this is the highest gross short interest since June 15, 2010, and the biggest increase biweekly increase in NYSE short interest since the S&P's plunge to 666 in March of 2009. If the central planners pull something out of their sleeve, and the short interest plunges to recent averages in the mid 13 billion share level, expect some even more furious short covering sprees to send the S&P much higher on an intraday basis.

Near Record Institutional Short Interest Caught With Pants Down In Motorola Mobility Acquisition

As if hedge funds did not have enough to worry about with redemption requests galore after last week's epic rout and vol surge, today's Google stunner acquisition of MMI caught a near record number of them with their pant down. The company, which had over the past year, ever since its spin off, become one of the most despised public companies, saw a 250% increase in its short interest since December, peaking at 25 million shares short, dropped to just under 20 million shares, or essentially the second highest to date. These are precisely the institutional shorts who are hating their live right now as they are sitting on a $260 million paper loss, enough to wipe out several mid-size hedge funds. Speaking of, following rampant rumors spread by CNBC's strategy session last week that various funds were blowing up left and right (in addition to perennial bete noire Paulson & Co of course), we have yet to hear of even one casualty. Just how tight of a lid are prime brokers keeping on their hedge fund client casualties if not one peep has been uttered about who blew up? Following today's trouncing in MMI, we doubt this secret will be such a secret for much longer.

NYSE Short Interest Jumps To Highest In 2011, Just In Time For The Squeeze

And just like that, the short trap is set: following some sideways movement over the past several months, in which the market grotesquely, mockingly did not proceed in a straight line up, unlike the 8 month "Birinyi Ruler" period from August to March which extrapolated to about S&P 2,800 in 2 years, some (naive) investors speculated that the Fed may be losing control of the market and proceeded to short ridiculously overvalued stocks, that no longer reflect not only the economy on Earth but probably on any other life-supporting planet in the known and unknown universe, in dimensions from 3 through 10 or anything else reasonably allowed by Kaluza-Klein. As a result, just announced short interest on the NYSE for the period ending April 29 has hit a fresh 2011 high, climbing to 13.094 billion shares from 13.05 billion . Alas, this comes just as the Treasury will do everything, and we mean everything, in its power to ram the market from the s to the p orbital, trap all the shorts, force the custodians to pull every share on borrow there is, and generally to make selling stocks illegal, probably coupled with a few thousand margin hikes in everything from precious metals to tetrahydrocannabinol over the next month just to keep traders' eyes focused on the ball, simply so it can divest some of its tens of billions in shares of AIG stock and claim victory over the tin foil clad skeptics. As usual, those hoping that the neo-feudal stock market is fair and/or efficient are about to be KYed.

Guest Post: Short Interest - Does It Mean Anything

The WSJ diligently reported short interest today. It increased in March. Unfortunately, I think this is just another example of data that is published, talked about, and even used to make decisions, that has failed to keep up with the times. Why do I think its important? We are seeing more trading rules of thumb breakdown. When we look to short interest, volumes, etc, as an additional guideline to evaluate the market's overbought/oversold conditions, etc, we should be looking at accurate data. I suspect that the reason so many relationships seem to have broken down, is because the data we look at is now effectively garbage. These changes in reporting should be incredibly easy to implement and I suspect would provide data that is more useful and maintains historical relationships better than what we currently get and discuss.

NYSE Short Interest Declines Again, Just In Time For Market Drop

While not at the lows from January, when NYSE short interest hit a multi year low of 12.4 billion shares, the just released update shows that into the end of February, total short interest once again declined from the Mid-February dead cat bounce which saw it at 12.8 billion, with the latest print at 12.6 billion shares. And now that the market is finally realizing that there is a several hundred point vacuum underneath if indeed there is even a brief break in Fed monetization, the number of shorts that may opt to cover on the market's way down is far lower than in recent history. Of course, this is what happens when everyone bets on the Bernanke Put and said Put starts to sputter, which simply means that the Fed chairman, who traditionally equates economic growth with the Russell 2000 is more boxed into a corner, than ever: QE3 will second gold to 2,000 and oil to 1,50. No QE3 will send the S&P to sub 1,000. Place your bets.

With NYSE Short Interest At The Lowest Level In Years Following A Record Short Collapse... Who Will Be The Bid?

One of the cute side-effects of the Fed's third mandate has been the successful elimination of all market shorts. A quick update of the NYSE short interest indicates not only the deplorable presence of shorts in the market (those entities who provide a natural bid when the market is plunging), but that the bulk of the market meltup over the past several months has been due exclusively to shorts covering existing positions. Well, with short interest now at a multi-year low of 12.4 billion shares (lowest since 2007), compared to 14.5 billion just after the Flash Crash, a 13.6 billion average over the period, and the lowest amount since the Lehman failure, our only question is when the market plunges, like it is doing today, who will be the natural short covering bid when stocks are in freefall?

NYSE Short Interest Drops To Lowest In 2010

According to the just released NYSE short interest update, the number of shares short on the NYSE group has just dropped to 2010 lows, after dropping by over 1 billion since the August highs. This has occurred pretty much in linear fashion: in the last 4 months, there has been just one two week period in which the shorts have increased. What is just delightfully ironic, is that even as broad market volume has collapsed, biweekly short covering has surged on a relative basis. In essence, the bulk of the market buying has been short covering, which traditionally is always 'offer-lifting' heavy, as shorts are willing to pay any price to cover underwater positions, especially if there is an accelerant involved, such as when a repo desk advises its "client" that State Street has decided to force squeeze financial stocks for the nth time since March 2009.

Bank of America Short Interest Plunges By 35% In October

As Bank of America was plunging throughout October, it appears its short interest was, counterintuitively, following suit. As the NYSE reports, short interest in John Paulson's favorite bank (or not - the Paulson & Co. 13F coming out in a few days may have some nasty surprises for longs) was 153MM shares at the end of September. This number dropped by a whopping 54 million shares, or 35.3% in just one month (see table below). This means that the ongoing drop in the name had little to do with a resurgence in shorting, and all to do with increased selling. Furthermore, the far more proportionately bigger drop in SI, means that should there be another notable weakness in the name, then the drop this time will be that more accentuated, as there is less of a short covering impetus to the downside (and greater room for new shorts). In addition to BofA, other notable observations are that shorts in Ford rose to 282 million, making it the second most shorted stock on the NYSE, just after perennially most hated company Citi, which had 423.8 million shares short. The other usual suspects were mostly ETFs which as readers know all too well by know, are merely short hedging vehicles to long single name positions by hedge funds.

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.

Shorts Refuse To Capitulate: End Of September NYSE Short Interest Near Record Highs

The one side-effect of the torrid market move over the past 40 days that every bull had been hoping for, a massive, and self-sustaining short covering spree, has completely failed to materialize. Despite what is now a 10%+ move since early September, predicated by nothing more than the dollar debasement and QE2 expectations, NYSE short interest remained virtually unchanged for the past 30 days, starting the month at 14.36 billion shares and ending the month at14.35 billion! In other words, the shorts' conviction that the rally is based on nothing fundamental is as strong now as it was when they were 10% more in the money. And that they are willing to experience such pain reinforces their expectation, right or not, that the market is way overbought and is due for a major pullback.

Lack Of Capitulation By Shorts, As NYSE Short Interest Remains Near Record, Explains Parabolic September "Flush" Ramp

A week ago, when we pointed out that the NYSE short interest had surged to nearly its highest levels in over a year at 14.4 billion shares, we speculated that as the market surge appeared to be moderating, that the 600+ million in new incremental shorts had covered. This, of course, happened before the most recent parabolic ramp in stocks (which was spun by CNBC as "validated" by Tepper's "buy stocks no matter what" comments). Friday's NYSE SI update now explains the seemingly ceaseless surge in stocks despite constantly deteriorating economic news. The reason: the gross short interest between August 31 and September 15 was completely unchanged! It appears that just as retail investors refuse to allocate capital to stocks regardless of how artificially high the market goes, so shorts completely ignored the ramp in the market from ~ 1050 On August 30 to around 1125 on September 15: short remained dead even at 14.4 billion. So what happens? State Street/BoNY gets the daily short report, passes it on the the repo desks, and tells them to pull the borrow in the most shorted stocks, as apparently the message to the shorts just isn't getting through. And what better way to force a short ramp than to keep shorts massively squeezed. But because the stubborn shorts don't buy the ramp in stocks, they keep putting on new replacement shorts, which has led the market to keep recycling the weakest hands, endless retail outflows be damned. Which means that the squeeze could easily continue for so long as the State Streets of the world believe that the shorts will finally capitulate, and make the rally self-sustaining. So far it is not working.

NYSE Short Interest Surges To Second Highest In A Year In Advance Of September Short-Covering Rally

Still wondering what caused the nearly 10% spike in the market? It sure as hell wasn't flows into funds and/or ETFs: both were negative for August, and we know that at least mutual funds have seen outflows for all of September. The reason is far simpler and it is no different from what caused the blind rally back in March 2009 when State Street commenced forced stock buy-ins after it gave an order to repo desks to recall all financial shorts: the NYSE short interest as of August 31 was 14.4 billion shares. This was the second highest gross short interest on the NYSE in over a year, and the highest since mid-June, when the market dropped from over 1,100 to the year lows just over 1,000. This time however, shorts were caught flat footed, as the spike in shorts by over 600 million NYSE shares, has seen a straight line market ramp beginning on August 31, and forcing blind covering without regard for what offers are lifted: a perfect environment for those who wish to set price on the offer side to execute their plan. At this point the short covering rally appears to have fizzled - we will update you on the mid-September SI data when it is released in a few days time.

NYSE Short Interest Lowest Since January As Selloff Buffer Disappears

Here is another reason why the market may soon undergo Flash Crash 2.0 on purely structural reasons that have nothing to do with the deranged computerization of capital markets - the one natural decelerator to any market collapse, short interest, was just reported by the NYSE to have hit a 7 month low, at 13.7 billion shares. This metric hit a 2010 high of 14.5 billion in the days following the flash crash, when the natural response by investors was to follow through on waht was expected to be a major market swoon. Yet the odd July move higher on no volume which was a direct replica of last year's action cut off this move into shorts early on, and the result now is that the short interest buffer is now gone. Absent the mystery bidder appearing, there will be few "profitable" buyers remaining to prop the imminent market crash.

NYSE Short Interest Drops By 200 Million Shares, Still Near 2010 Highs

Looking at the short interest in the NYSE one would think that the market is a mirror image of where it has been. Interestingly, even though for the week ended March 31, the NYSE recorded a drop in short interest by 224 million shares, the total number of 13.9 billion shares short is near 2010 highs. Beginning at a low of 13 billion shares on January 1, short interest has risen steadily hitting the YTD high of 14.1 billion on March 15. It appears that the shorters, at least as indicated by this data series still continue to disbelieve the no volume melt up. We will observe the next update in two weeks to see if the April 15th data point indicates capitulation by the shorts, or if shorts have layered into bearish bets. To be sure, compared to prior year short positions, which hit a high of 15.6 billion just before the second half 2009 rally began, we are at materially lower short levels.