When I clicked it, the 12-month chart popped up. My initial impression was that the inverse correlation between cumm. % shorted vs. sp didn't appear very persuasive. Then it occurred to me that the same vertical spacing as used for each 1% incr on the lhs vs 10c incr on the rhs had dampened the visual effect on the sp chart (grey line).
So I called up the 3-year chart and noticed that the vertical spacing was changed to that between 2% vs. 10c. So the dampened visual effect had been removed considerably, thereby showing a more persuasive inverse correlation.
The interesting FA interpretations for me were:
1. The massive spike in cumm. % shorted from late-Feb17 to mid-Jun17 was the impending VE rebalancing and traders front-running the event.
2. After arbitrarily adjusting for that spike in the chart, I see a rather close inverse correlation between the cumm. % shorted and sp.
3. There were a couple of points where large spikes in cumm. % shorted were very short-lived because the sp continued to increase despite the spikes. Too bad, shorters.
4. From mid-Jul17 to mid-Aug17, shorters launched 4 attacks on the sp but without much success because the sp remained relatively stable. These were probably nervous shorters who returned the borrowed shares fairly quickly.
5. There were also some periods where the inverse correlation was very close; such as from early-Aug17 to late-Nov17, when the cumm. % shorted increased by about 40% and the sp dropped by about 18%. Here the shorters were successful.
But it would be incorrect to attribute sp performance solely to the effects of short selling. Embedded in both of the trends is the effect of shareholders' not insignificant disappointment arising from unmet expectations from the recent qtrly reports.
Many of us are now looking forward to a great positive impact from the Dec17 qtly report on the sp and the cumm. % shorted. As one poster used to end his posts: we await. R.
BDR Price at posting:
18.0¢ Sentiment: Hold Disclosure: Held
