abstract:The short ratio (or short interest ratio, SIR) for a public company is a metric signaling prevailing investors' sentiment. The ratio is calculated by dividing the number of shares sold short by the average daily trading volume, generally over the last 30 trading days.
Over the years, I have found that even a shortinterestratio as low as 5, when combined with a positive technical pattern, can set up a good trading opportunity.
In utilizing the shortinterest data, one can look for a large percentage increase in the number of shares sold short, or the shortinterestratio, which tells the number of trading days that would be needed to cover the short position.