Comments on: Short Interest Down on Financials and Auto Companies

By: PureGuesswork

PureGuesswork — Sat, 29 Nov 2008 12:48:00 +0000

Let me suggest a rather simple explantion of why short interest is falling in some of these stocks: diminishing returns. Where is the potential for holding short a stock which has fallen to under 5 dollars? On shorts, profits approach a definable limit. And the closer you get to that limit, the more unstable the price action gets. You can wait to get closer to the limit (zero); or–as you wait–you can see the price spike up a distance several times greater than the maximum potential downside profit. I think that happened with Citi, GM and Ford in the last week.

By: ndk

ndk — Sat, 29 Nov 2008 01:21:00 +0000

Ask any recent VW shorter...

I hope nobody here got caught on the wrong end of that howitzer. Probably a lot of lachen und tranen in Frankfurt that day. Here's a hilarious article. It looks like Porsche's heavily exposed on the way down, so this particular comedy's not over yet.

Porsche said this week that its Volkswagen options bets produced a gain of 6.83 billion euros ($8.8 billion) in fiscal 2008. The company made 1 billion euros from selling vehicles.

By: a

Fri, 28 Nov 2008 23:04:00 +0000

We would like to sell GM but can’t because we can’t borrow the shares. Just sayin’…

By: bg

bg — Fri, 28 Nov 2008 22:42:00 +0000

"And any purchase of stocks is a bearish signal since they will have have to be sold in the future... :-/"

no, no, no. Us shorties have different time frames than most longs. I am short financials for the sixth time in a year right now. I would not dream of holding a short ETF for 30 years. In the long run all sectors rise in value.

For most investors, most assets are in long term long positions.

Short interest is a proxy for the time frame of the parties involved. And exceptionally high short interest is bullish. Ask any recent VW shorter...

By: DailyVus

DailyVus — Fri, 28 Nov 2008 21:57:00 +0000

'government intention' –a nice way of saying the government actively manipulates markets in what heretofor was criminal.

Lawlessness reigns supreme. We'll pay for this. strike that

we are all paying for this.

By: eh

eh — Fri, 28 Nov 2008 21:32:00 +0000

It’s a dangerous market.

By: Yakov Tsveig

Yakov Tsveig — Fri, 28 Nov 2008 20:55:00 +0000

“And the article also neglects to mention that short interest is actually a bullish sign, since any short sale will eventually have to be covered with a purchase of the shares.”

And any purchase of stocks is a bearish signal since they will have have to be sold in the future… :-/

By: leftback

leftback — Fri, 28 Nov 2008 20:33:00 +0000

Anyone watching or riding the rally in C and F this week would know that they were seeing a short covering rally.

I had a nice time riding the rally and made 100% in F but I think that’s all she wrote.. this is no market to get greedy with.