What can you learn from the SGX shortseller report?

Shortselling report top 18 STI stocks by value

It's valentine and all I see is....

Data data data. Sometimes you ask yourself, I have so much data, how do I make sense of all of it?

Well. In essence, it helps to know what you are looking for, then look for the data that may give you the answer.

As my banking professor used to say context. You need to get the context right!

Take the example of SGX shortselling report. A useful report which few people know how to use...in essence what causes market fluctuations? How do you know a stock is bottoming out? How do you know you better stay away because the huge fund managers are hitting the stock on the dollar?

Well, maybe I can give some insight...hopefully its right because its very much my intuition.

1. If there is high shortselling percentage based on the shortsell ratio (e.g. >20%) + sharp drop in price (e.g. < - 2%).... do stay away because the selloff is not done yet.
- Think DBS and OCBC right at the top

2. If there are high shortsell % + minimal movement of share price downwards (or even increase)....do take notice...a possibility is that the upside is coming as the buyers are accumulating.
- Think Singtel, Starhub, HPH Trust as above

3. If there are low shortseller interest and the stock price falls significantly....maybe its best to cash out, it could mean the buyers are selling out totally and the stock may be a junk piece soon.

Additional PLUS point
4. If there are low shortsell interest and significant rise in price (e.g.>2%), take note because the upside is really there especially when paired with high volume.

In a nutshell, bottom fishing can be done with some thoughtful thinking. Alternatively, you can take note of your favorite great stocks (think good fundamentals) and wait for the shortsell ratios to drop to low percentages...that's probably a reasonable time to enter a purchase.

Happy investing,
TFG