Tuesday, March 11, 2008

Short Covering Rally?

The average stock in the Russell 1,000 is up 1.75% today. We broke the index into deciles based on stocks' short interest as a percentage of float (100 stocks in each decile) and calculated the average change of each decile on the day. As shown below, the deciles of stocks that are most heavily shorted are outperforming the deciles of stocks with the least short interest. While the differences are not that extreme, it does indicate that short covering can be attributed to some of today's moves. Expect this trend to continue when the market gets bounces like this. With so many shorts out there, it doesn't take much for the skittish ones to run for the hills.

Decile310

Below we highlight the best performing stocks in the Russell 1,000 on the day. As shown, TMA is up a whopping 50% to just over one whole dollar. CFC and IMB are up more than 12%, and DFS is up 10%. Other notables on the list of today's winners are MOS, WM, MS, FRE, LEH and C.

Best310

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Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.