Over the past quarter the only thing that has fallen faster than stock and commodity prices has been NYSE short interest.  NYSE short interest has fallen nearly 30% despite sharp declines in stocks.  Now, much of the acceleration in short interest over recent years has been due to the increasing number of absolute return funds, but the near term decline is interesting.  I view short interest as a poor barometer of future stock market moves, but it can’t be overlooked that the fuel that creates short squeezes and generally drives big moves in the market is decreasing rapidly.

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