Market Sentiment

Barron's today said that short interest is at the lowest levels since 2000. This is contrary to the prevailing sentiment that the bears are on the prowl. I think that the past couple of weeks can be explained by a lot of shorts being covered. What does this mean? I think that when the market starts to drop again over the next couple of weeks, the bears will come out with lots of ammo. On the other hand, margin borrowing is at very high rates. This may be a rash assumption, but I think that most margin borrowing is used for long positions, not shorts. This means that the bulls don't have much ammo.

I'm sticking with my shorts.