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 ?
In today's column, we'll look at some of the heaviest short-interest ratios (levied against optionable stocks).
Without further ado, here are some of the largest short-interest ratios on the NYSE and Nasdaq exchanges.
These sound like small numbers, but we study short-interest ratios too, which measure how many days it would take, at current trading volumes, to cover all the shorted shares.
From our contrarian perspective, short-interest ratios above 3.
As contrarians, we view short-interest ratios of 3.
After that, I screened out stocks that had short-interest ratios greater than 3.
As contrarians, we view any short-interest ratios higher than 3.
Short-interest ratios above three are considered to be entering the realm of investor pessimism, so the current level of 2.
Earlier today, I was scanning for stocks with high short-interest ratios when I noticed a stock that was of interest to me, Fifth Third Bancorp (NASDAQ:FITB).
Frequent guests to our site will remember that short-interest ratios in excess of three can spark covering rallies that propel the stock higher.