Looking at short interest of some US stocks [Crowded Shorts]Hello, I have to look at some details on a FX strategy and it is alot of mental effort, therefore here I am looking at high short interest on stocks that I do not even trade :)
Let's look together at the most shorted stocks in the USA.
What I think happens in Wall Street is every one copies every one.
If a fund misses out on something that every one else has been doing, their clients will be unhappy.
If a fund loses money but every one else did too "it was a hard year so it's normal.
"We didn't do worse than the competition" and clients stay with them rather than look for another 2/20.
I would classify groups of market participants in such a way:
- sovereign funds
- pensions etc
- hedge funds
- biggest fund in the world: japan families/housewives (they are all bound to the same laws and fundamentals, they are half the reason why crypto went up I think, the other half being USDT)
- noob retail (represented via what robinhood users are doing)
- banks but not that much
- warren buffet
- entire community positions (short interest for example)
- twitter, wallstreetbets, other social networks?
First, by dollar volume:
Looking at the 2 other companies in the top 5 by % shares shorted that I didn't look at already (the 3 were match tdoc mdco):
What are all these countertrend warriors?
GM has an mcap of 50 billion (mdco is only 6 bil big for example), not in an uptrend, and it is not even in the top 150 most shorted stocks...
GE: 100 billion market cap. Not in the top 150! What can more easilly shoot up 200%? A little scooter mcap of 5 billion, or a giant cruiser ship of 100 billion?
It's not like they have 0 trading volume...
I heard in the media that wall st shorting stocks was a bearish sign but I'd rather not listen to these clowns. Maybe it was far in the past. Maybe in some cases.
Not when the whole herd does the same thing.
In the top 150 most shorted stocks I look at the ones with the lowest float % shorted:
Netflix already done, trending down
Charter com already done, going up
That's only a few examples, it would require way more study.
But looks like the very shorted ones are bad to short, just the herd brainlessly piling up, under 10% seem fine.
First impressions are that stocks shorted 5-9% might be a sign something is up, or at least it is not a reason NOT to short.
But these > 20% like Tesla are just too much.
Shorting > 30% is just asking for huge short squeeze candles and as well as gaps up.
And using options won't solve the issue of the price going up and it being a loser just because everyone else is getting margin called.
First impression was probably correct. The herd is brainlessly doing what others are doing.
Trading as a individual competing with huge companies super computers etc is not that hard really, how obvious can it be to not short crowded shorts?
It's really easy, ye 95+% fail, they're all just either irrational, braindead, or don't put in the thousands of hours required. Duh! What? You need over 10,000 hours of learning & experience to get anywhere (or at the bare min 5k for a +1 std dev IQ)? NO WAY! Wow this is so hard. You actually have to spend some time actively getting good like with anything else even video games? Impossible!
Every one wants to be a countertrend trader smh. Not just countertrend, ALL TIME HIGH & 25% of all shares sold short countertrend trader. So stupid. There's no excuse. It is stupid.
