Short Interest Ratio


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Short Interest Ratio

In technical analysis and fundamental analysis, a ratio of the short-sold shares of a publicly traded company to the trading volume over a given period of time. This is an indication of the market's sentiment regarding a particular stock. A higher ratio indicates a feeling that the stock will decline in value, while a lower ratio indicates general belief that it will rise. It is not an exact indication, as it fails to take into account matters such as the potential exercise of convertible shares. Fundamental analysts interpret a high ratio as bearish because it shows an expectation for lower prices; on the other hand, technical analysts see a middling ratio as bullish as it may indicate a demand for a stock among hedge funds unable to cover a short sale. The short interest ratio is also called days to cover. See also: Hedge fund.
References in periodicals archive ?
Short interest fell 15 percent in the latest reporting period, bringing the short interest ratio in at 2.
Short interest grew by 22 percent last month and the short interest ratio now stands at 4.
42, which is a percentile rank of 52, the short interest ratio is at 1.
In July, the SBI Weekly predicted the NYSE short interest ratio would rise to 5.
We view a high short interest ratio in the midst of a price uptrend as a bullish sign, as some short may eventually be "squeezed" into buying back their shorted shares, providing additional buying power.
The short interest ratio was also showing indifference from investors with a reading of 2.
While a low short interest ratio cannot really hurt a stock, it would not help support a stock much during declines when shorts cover to take profits, nor would it help fuel much upside due to short-covering during a rally in the shares.
As the total number of shares sold short has risen, the short interest ratio (short interest divided by the average daily volume) has dropped.
8 million, for a short interest ratio of fewer than four days to cover.

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