Series 7: 9.4.2.5 Short Interest Ratio

Taken from our Series 7 Top-off Online Guide

9.4.2.5  Short Interest Ratio

The short interest ratio is the number of short positions divided by the average daily trading volume. Technical analysts assume that a stock’s price will rise after there has been a large amount of short selling on that stock. This is because short sellers will eventually have to buy shares in the market to close out their short positions, so that should lead to an uptrend in the price of the stock.

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