the second half of June, the exchanges said on Friday, suggesting
a continued increase in bearish sentiment following a recent run-up
in stocks.
The broad Standard & Poor's 500 index shot up about 40 percent
from 12-year lows hit in early March and peaked in thefirst half
of June, but was essentially unchanged for that month following
large increases in March, April, and May.
The increase in short interest at the end of June suggests
some investors are betting the upward trend will reverse.
Bill Rhodes, from Rhodes Analytics in Boston, said investors might
be ready to reverse their bets. "People who believe (the market)
has rallied all it is going to are going to go in and short it
again," he said.
So far in July the S&P is down 4.4 percent, which could mean
increasing profits for short sellers, as they borrow shares and sell them
with the expectation of buying them back at a lower price,
pocketing the difference.
As of June 30, short interest rose 1.6 percent to about 15.6
billion shares on the NYSE, compared with 15.35 billion shares
as of June 15. Short interest made up 4.08 percent of shares
outstanding.
Short sellers "probably think the larger companies have easier
access to liquidity and capital," Rhodes said, a position that
could better allow shares of those big companies to withstand
another downturn.
Morningstar Investment Research: Free Online Trial. 4,000 In-Depth Reports, Ratings. Data on 20,000+ Stocks and Funds.
