Sharp increase is reported in short-selling


NEW YORK -- The number of shares sold short and not yet covered between mid-May and mid-June on the New York Stock Exchange rose sharply for the third straight month, the Big Board reported Friday.

The figure, which reflects growing pessimism among investors about the market's direction, finished the period at 820.3 million shares. That was an 8.7 percent increase over the 754.6 million reported the month before.

It means short interest on the Big Board has shot up 18.7 percent since mid-March, when it first reversed course.

The year-to-date trend on the American Stock Exchange is less clear, since its monthly figures are often restated. In the latest period, short interest reached 66.7 million shares, up 7.8 percent from mid-May.

Traders said the latest spike in the numbers reflected a growing bearishness among investors, and not just those devoted to ferreting out overvalued stocks so they can bet against them.

Those professional bears, known as short-sellers, can often make money by borrowing the stock of companies they think are ripe for a fall. They then sell the shares in the expectation of replacing the borrowed stock at a price below their sales price.

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