The most recent short interest data has been released for the 06/30/2017 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the S&P 500 by "days to cover." There are a number of ways to look at short data, for example the total number of shares short; but one metric that we find particularly useful is the "days to cover" metric because it considers both the total shares short and the average daily volume of shares typically traded. The number of shares short is then compared to the average daily volume, in order to calculate the total number of trading days it would take to close out all of the open short positions if every share traded represented a short position being closed.In our new rank based on the most recent short interest data, Sealed Air Corp ( SEE - Get Report) has taken over the position of #218 most shorted S&P 500 component, from Gartner Inc ( IT) which is now in the #176 spot. The "days to cover" at 06/30/2017 was 3.48 for SEE, and 3.97 for IT; this compares to the average across all S&P 500 components of 3.90 (down from the average back on the 06/15/2017 settlement date of 4.28). The chart below shows the movement over time of the "days to cover" values of both SEE and IT, versus the average S&P 500 component. Below is a chart showing the relative positions of SEE versus IT over time within the 500 S&P 500 components, with #1 representing the component with the highest "days to cover" value (most heavily shorted) and #500 representing the component with the lowest "days to cover" value (least heavily shorted): A stock with a high "days to cover" value compared to its peers would be considered to have a higher level of short interest as compared to those peers. This could mean short sellers are using the stock to hedge a long bet elsewhere, or could also mean that short sellers believe the price of the stock will decline. When short sellers eventually cover their positions, by definition there must be buying activity because a share that is currently sold short must be purchased to be covered. So investors tend to keep an eye on that "days to cover" metric, because a high value could predict a sharper price increase should the company put out some unexpectedly good news — short sellers might rush to cover positions, and if the "days to cover" number is high, it is more difficult to close those positions without sending the stock higher until the higher price produces enough sellers to generate the necessary volume. Below is a three month price history chart comparing the stock performance of SEE vs. IT:
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Jim Cramer: It's Too Early to Gauge Qualcomm's Impact on Apple
Jim Cramer weighs in on Qualcomm's impact on Apple after a judge ruled in favor of the Federal Trade Commission in an antitrust case against Qualcomm.
Jim Cramer: How Investors Can Protect Themselves From a Tech Cold War
Jim Cramer has a stock pick for investors anxious about the possibility of a tech cold war.
Stocks Fall as U.S. May Blacklist More Chinese Companies, Qualcomm Tumbles
Stocks retreat Wednesday on a report the U.S. could blacklist more Chinese companies.
GM's Costly Ride-Sharing Fiasco Highlights the Genius of Alphabet's Waymo
Instead of earning a profit from selling vehicles, the mobility model captures a service fee based on passenger miles driven. Waymo is really about the algorithms that turn sensor data into actionable instructions based on machine learning and AI, areas where Google excels.