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July 7, 2008
Short Interest Is Up 55%
Could this be some sort of bubble?
Record bets against U.S. stocks may mean the market is on the verge of a rebound fueled by purchases of shares that were sold short, according to JPMorgan Chase & Co.
So-called short interest on the New York Stock Exchange has risen 55 percent this year to a record 3.6 percent of listed shares, JPMorgan Chief Equity Strategist Thomas J. Lee wrote in a report today. In a short sale, an investor sells borrowed shares in anticipation of being able to buy them back later, or “cover,” at a lower price.
Given the “extreme levels” of short interest, positive catalysts for the market “could trigger a substantial short- covering rally,” New York-based Lee wrote.
The article notes that 36% of companies in the S&P 500 have at least 5% of their shares sold short.
Posted by edelfenbein at July 7, 2008 12:16 PM
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