Short interest on the S&P 500 dropped in the last reading. This is consistent with the major market averages moving quickly higher, part fueled by the bull argument of a quick and painless recovery and part by the bears running for their caves.
The chart below illustrates the short-interest ratio for the S&P 500 stocks. Notice that major drops usually are a sign of a market coming into a “topping” formation. In other words, heavy short interest helps to propel stocks higher when sentiment changes and visa-versa. So much for the idea of stopping short-selling as it is one of the key drivers that helps to provide liquidity and yes…..BUYS. SEC are you listening?
(Click charts to enlarge)
Below are the the trends per sector that may be of interest.
Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.