Sep

1

The flexion of the day stayed in Germany [8/30/2018]. Note how the Dax is down 110. Apparently they left for beer at 11. And the bunds are up 78.

Anatoly Veltman writes: 

Note the reluctance to discuss or contemplate LEADING indicators that actually present economic sense. For example: everyone knows that EUR currency is associated with economic development and "order". While Swiss currency is associated with defensive posture and "calamity" hedge. The EURCHF pair doesn't move as much as other pairs in FX, because both currencies in the end are European currencies. Yet the pair has reversed since yesterday's SP record, and managed a straight 1% drop since…Now(?) Steve here is raising a possibility of a calamitous announcement over the weekend, but he wasn't raising it "before" the SP moved lower?

Cagdas Tuna writes: 

Average short interest % to floating shares in FAANG is 1.64% and if we exclude Netflix it is 1.07% Does that kind of statistics provide any hint to market tops or bottoms? 

Bill Rafter writes: 

In our shop we have done a lot of work with short interest (SI). First, we noted that THE expert on SI (Erlanger) first identified "stocks to buy" and then screened them for any added benefit that could come from SI. Next, we worked the research from the opposite angle. That is, we first identified stocks with good SI potential, and then went on to screen them.

We were wrong. Apparently half of the stocks with high SI are truly good shorts. Of the remaining a relatively small percentage became good short-squeeze candidates. The others just went nowhere.

However we went further, studying stocks with extremely low SI. The theory is this: If you have a stock that even a damn fool idiot will not short, it probably means something. Assuming that certain fundamentals are unknown, we came to believe that it reflected on the quality of management. Of course we have no way of proving that, but still consider extremely low SI as bullish sentiment. That's intuitive, but at least we have some research to back it.


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