17 May 2010

Atheros: Wireless Technology Breaking Its Channel

Atheros (ATHR) is in a variety of wireless technologies.  The stock had been in a well-defined uptrend since the market low in March 2009.  The stock, in a very orderly fashion moved though the channel illustrated in the chart.  In this month's decline, ATHR broke-down out of the channel.  This could be a very bearish sign for the stock.  In fact, after slicing through the channel on the crazy Thursday, ATHR rallied back to the channel and failed.  However, all may not be lost for ATHR.  On the big down day on May 6th, ATHR fell to the 200 day moving average and bounced.  That point, coincidently represented a 38.2% retracement from the April 21st high.  This retracement level is important to those who follow Fibonacci levels.  Today ATHR traded again to the 200 day moving average and again it bounced.  So where does this leave us?  I'd say that ATHR needs to get back into the channel before it can be considered a buy.  The channel lies around $38.  The stock closed today (May 17) at $34.71.  Of course, if ATHR falls below its 200 day moving average, it could fall a long way, perhaps to the gap between $23 and $24.

28 May 2009

Bloomberg: Shorts Covering On the S&P 500

Short Sellers Pare Bearish Bets After S&P 500 Surges (Update1)

By Matt Townsend

May 28 (Bloomberg) -- The steepest rally in seven decades is convincing more short sellers they were wrong about the U.S. stock market.

Shares of Standard & Poor’s 500 Index companies borrowed and sold short fell 1.7 percent to 9.87 billion between April 30 and May 15, the lowest level since Feb. 27, according to exchange data compiled by Bloomberg. Short interest declined the most in technology companies. Traders reduced bets against Microsoft Corp., the biggest software maker, and Cisco Systems Inc., the largest supplier of networking equipment, by more than 25 percent, the data show.

Investors turned less bearish as the S&P 500 surged 37 percent between March 9 and May 8. U.S. stock exchanges release data on short selling, or the sale of borrowed stock with the hope of buying it back at a lower price, every two weeks. Yesterday’s report was the third in a row that showed a decrease in wagers that stocks would decline.

“The perceived risks in the industry have diminished considerably,” said Bill Frels, the St. Paul, Minnesota-based chief executive officer of Mairs & Power Inc., which manages about $3.5 billion. “Stocks have all acted a lot better.”

Short Slump

Short interest for the S&P 500 slumped to 5 percent of shares available for trading, also known as “float.” It’s down from 5.6 percent in March and 5.9 percent in July. The index has gained 0.7 percent this week. Futures on the S&P 500 added 0.2 percent as of 5:39 a.m. in London.

The number of shares sold short for technology companies in the S&P 500 fell to 1.49 billion shares as of May 15, when the group’s gain since March 9 was 31 percent.

Financial institutions in the index experienced a 3.2 percent decrease in short interest to 3.37 billion shares. Principal Financial Group Inc. led the decline with a 40 percent drop in bearish bets. Since the S&P 500 sank to the lowest level in 12 years on March 9, the industry has rallied 86 percent.

Short interest in New York-based cosmetics maker Estee Lauder Cos. fell 42 percent, the most in the S&P 500 between the end of April and May 15.

Traders boosted short sales on railroad operator CSX Corp., based in Jacksonville, Florida, to 5.6 percent of float from 1.48 percent. Total shares shorted almost quadrupled to 21.6 million.

Citigroup Inc., the New York-based bank that has plunged 83 percent in the past year, is the most-shorted company in the S&P 500. Its short interest of 1.28 billion shares is almost four times greater than the amount for American International Group Inc., the New York-based insurer that the U.S. government bailed out in September. Twenty-five percent of Citigroup’s float is shorted.

To contact the reporter on this story: Matt Townsend in New York atmtownsend9@bloomberg.net.

Last Updated: May 28, 2009 00:50 EDT