The ratio of total short selling by value on Hong Kong’s mainboard versus the shares traded reached almost 1-to-7 yesterday, the highest level since Feb. 25, 1999, according to data compiled by Bloomberg. The benchmark Hang Seng Index declined 0.6 percent today at the midday trading break.
Time to squeeze ’em
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Similarly, the AAII sentiment survey from last week was extremely pessimistic.
In a population of about 1300 weekly surveys (25 years), the numbers from last week were in the 7th percentile for bullishness and 92nd percentile for bearishness.
The survey for the week ending 5-23 saw a 7 percentage point shift to the bullish side. That leaves it in strongly bearish territory, but not lopsided enough that I’d consider it a signal. The survey is pretty noisy, with a standard deviation in the area of 10 percentage points.