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The Total Short Ratio (or TSR) is the percentage of short sales versus the total volume on the NYSE., taking a contrarian view that public short sellers are most often wrong, and in that sense the Total Short Ratio basicallly shows investor expectations. High values of the TSR suggest the bears are out in force, while low values suggest the bulls are winning. This means that when investors expect a market decline, the smart money is looking instead for a rise. Very low levels of short sales therefore suggest bullishness, and the market is due for a fall. As a mid term indicator (data being collated once per week) the Total Short Ratio may be useful as an accessory to day trading, although most day traders seem to believe it has lost its efficacy in recent times due to increased hedging and arbitrage strategies. To calculate the Total Short Ratio, divide the total number of short sales by the total number of buy and sell orders (these figures reported every Friday by the NYSE). . |
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