I contend there is no relationship between a share falling and the degree of open short positions. The Shortman website shows all the top 100 most shorted stocks. Some are bullish, some are bearish. Some stocks like A2M can be trending up and making new 52-week highs, yet the degree of short interest is very similar to BAL.
There can be different reasons for shorting a stock. For many it is a simple hedge strategy.
The common belief that shorters are in sufficient control to contribute to a stock's fall is a widely propagated myth. The simple truth is that sentiment drives down a share. Sellers are more keen than buyers to sell out at lower prices. Buyers are less keen to buy because they sense a falling market from aggressive sellers. Case in point: with a weak stock like WSA, I will often first go in at only half my usual position size in order to test if it will go up. If it starts falling away, I sell. WSA is not a strong stock making new 26-week or 52-week new highs, hence the downtrend breakout failure is higher.
WSA Price at posting:
$2.30 Sentiment: None Disclosure: Not Held
