Short Selling: Short Interest At Nasdaq Hits 4-Month High --- Data Indicate Higher Level Of Investor Skepticism, Suggesting Index Drop
Short interest at the Nasdaq Stock Market reached its highest point in four months, as the market's composite index dropped.</br></br>The number of short-selling positions not yet closed out edged up 1% to 4,124,763,193 shares in the month through April 15 -- up from 4,085,825,647 shares on March 15.</br></br>Investors who sell securities "short" borrow stock and sell it, betting the stock's price will fall, and they will be able to buy the shares back later at a lower price for return to the lender. Short interest often is considered an indication of the level of skepticism in the market. Short interest reflects the number of shares that have yet to be repurchased to give back to lenders. In general, the higher the short interest, the more people are expecting a downturn.</br></br>Some investors will allocate part of their portfolio to a professional short seller to hedge, or protect, their assets in case the market falls. Investors also may rely on short selling for other purposes, including a hedging strategy related to corporate mergers and acquisitions, hedging convertible securities and options, or tax-related reasons.</br></br>The next Nasdaq short-selling report will be published in The Wall Street Journal on May 27.