For an indication of how quickly investor sentiment is changing look no further than the financial sector. Just a few days ago, money was pouring into the financial sector on the assumption that the lagging
sector was finally poised to perform in a recovering market.
Today, as stock prices tumble on fears of European economic contagion, the primary proxy for the financial sector, the Select Sector Financial�SPDR (XLF) is appearing on the “hard to borrow list” that highlights securities that are heavily shorted, according to analytics service Trade Alert, which maintains lists of those shares that are hard to borrow kept by various investment banks.
In essence, when a security is placed on the hard to borrow list it means that anyone who wants to�short the security will have trouble because so many people have already done the trade. In recent trading, XLF was down 2.25% at about 16.
(Note that as a substitute, you can go long FAZ (FAZ), the bear ETF, which is up 63 cents, or 5.4%, today at $12.28.)
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