Short Interest

Short interest is the total number of shares that investors have sold short and not yet bought back, often shown as a percentage of shares available to trade. It reflects how many traders are betting the price will fall. High short interest signals strong bearish sentiment, but it can also set up a sharp rally if those bets are forced to unwind.

Use short interest to gauge bearish sentiment and the potential for a short squeeze, where rising prices force short sellers to buy back, pushing the price even higher. Look at days to cover, which estimates how long it would take shorts to exit based on trading volume. High short interest alone is not a buy signal; understand why traders are bearish.

If a stock has 20 percent of its float sold short and the company then reports good news, short sellers rushing to cover can spark a rapid price spike, a classic short squeeze.