i am always concerned when i see a new significant increase in...

i am always concerned when i see a new significant increase in shorts in a stock that has risen to a very high p/e or rising shorts in a stock for no apparent reason, because as madamswear implies this suggests an overvalued stock or one in which something has fundamentally changed which the shorters are aware of/ predict but think the market has not yet become aware of or appreciate.

to the contrary, i am always interested in a stock in which the shorts show a significant decline and the price shows strong bullish bottoming signals, because this may complement my fundamental analysis that the stock has become undervalued / ue the market has oversold a stock to a level well below its intrinsic value.

so rising shorts should be taken into account as a strong ted flag warning signal to re appraise your valuation and outlook for a company you hold, and fallings shorts are a potential buy signal if it is consistent with buy signals on your short-medium term technical analysis and your medium-long term fundamental analysis.

acx hasnt definitively broken its medium term bear pattern yet, but the technicals are looking very close to a strong buy signal if it can hold in mid 3s and bounce to high 4s again over july/ august.

the fundamentals for acx look positive but are difficult to accurately predict because there are so many macro, geopolitical and political/ policy based things that cant be predicted with a high conviction. there are plenty of risks in terms of anz construction/ housing and aus economic macro weakness and trump policy failure and brexit and middle east instability and china public debt levels and low oil prices affecting middle east capex, but they are all potentially able to be overcome and if they are, acx will do well over the next 3-5 years.

the shorters in acx see potential for a positive outlook for fy18 at the full year results despite the recent downgrade in feb, so hence they are locking in profits and reducing their exposure. its no guarantee the price wont go lower, but it is less likely now than in feb/ march.