{"id":2582,"date":"2010-09-11T21:26:43","date_gmt":"2010-09-12T01:26:43","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=2582"},"modified":"2010-09-11T21:26:43","modified_gmt":"2010-09-12T01:26:43","slug":"cisco-short-interest-surges","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2010\/09\/11\/cisco-short-interest-surges\/","title":{"rendered":"Cisco Short Interest Surges"},"content":{"rendered":"

For the two weeks ending August 31, short interest in Cisco (CSCO) surged 26% to 52.4 million shares (only 0.7% of float<\/a>). This is close to the current 52-week high set on March 15. Over the past year, there were only two other periods that matched this recent surge in percentage terms: short interest increased 26% for the two weeks ended June 15 and a whopping 60% for the two weeks ending February 12. <\/p>\n

The chart below shows that there is no day-to-day or week-to-week correlation between short interest and share price for CSCO over the past year, but there are some interesting features to the relationship.<\/p>\n

Shorts declined rapidly as the stock went nowhere in the final three months of 2009. The 8% drop from the January highs must have re-awakened shorts as they surged immediately after this. However, as CSCO began a strong price recovery, shorts eventually retreated again. The next phase of renewed interest in short positions came after CSCO had declined 18% off the high. Within another 4-6 weeks, all these incremental short positions were wiped clean again as CSCO dropped 4% ahead of a small relief rally. The current spike occurred as CSCO began a fresh post-earnings plunge in August.<\/p>\n

In other words, although it appears the shorts in CSCO are a little more reactionary than proactive, four out of the last five major changes or trends (up and down) in short interest have been roughly correct in a broad sense. So, I consider this recent surge in short interest to be a strong red flag. However, if the stock manages to continue higher from here (like a fresh high for September), I will assume the ensuing short-term upward bias will sustain itself for at least a few weeks. I will look for a decline in short interest to confirm the potential for higher prices. Resistance from the declining 50-day moving average (DMA) is almost 8% above current prices (not shown on the chart below).<\/p>\n


\n
\"Short<\/a>
Short interest in CSCO soars close to 52-week highs<\/figcaption><\/figure>
\nSource: short interest data from NASDAQ<\/a> and Reuters<\/a><\/strong>
\n<\/center>
\n<\/p>\n

Be careful out there!<\/p>\n

Full disclosure: long CSCO calls<\/p>\n","protected":false},"excerpt":{"rendered":"

For the two weeks ending August 31, short interest in Cisco (CSCO) surged 26% to 52.4 million shares (only 0.7% of float). This is close to the current 52-week high set on March 15. Over the past year, there were only two other periods that matched this recent surge in percentage terms: short interest increased … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[62],"tags":[254,255,419,1597],"class_list":["post-2582","post","type-post","status-publish","format-standard","hentry","category-technical-analysis","tag-cisco","tag-csco","tag-short-interest","tag-technical-analysis"],"yoast_head":"\nCisco Short Interest Surges - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2010\/09\/11\/cisco-short-interest-surges\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cisco Short Interest Surges - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"For the two weeks ending August 31, short interest in Cisco (CSCO) surged 26% to 52.4 million shares (only 0.7% of float). 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