Public/Specialists Short Sales Ratio
The Specialist/Public Short Sales Ratio is a market sentiment indicator.
It is calculated by dividing the volume of the weekly short sales made
by the public (non members) by the weekly short sales made by stock exchange
specialists (members). A 4-week moving average is applied to smooth out
the swings. The public is usually wrong about the trend of the market.
If they are shorting heavily the market is usually ripe for an upturn.
On the other hand, if they are doing relatively little shorting it is
most likely that the market is near a correction, especially if specialists
short sales increase at the same time.
High readings indicate heavy shorting by the public (the so called crowd)
and therefore bottoms, low readings indicate tops.
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