Since early August, the NYSE Short Interest Ratio has been steadily climbing as the market has moved higher. As of Friday, the NYSE Short Interest hit 21.51, a five-year high. I prefer to take a contrarian view with this data point. Sometimes the market gets very interesting when sentiment is at its worst. When there is a divergence between the technical action and investor sentiment, at some point the sentiment has to shift. (That is why we consider the charts first). The market is holding its recent gains from Thursday and Friday very well, and there are many good looking chart patterns on our leaders lists. Those shorting here are in a tough position. As the strength continues and becomes more obvious, many will be forced to reverse their decisions.

 

 

 

Happy Hunting,

 

Scott O’Neil

President, MarketSmith Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil