Number of shares shorted is a key number to look out because you want to see how many people are betting against the company so to speak. Another terminology you may have heard is short interest. For example, if there are 100 shares outstanding and 10 people are short, then there is a 10% short interest in the company. Many people fail to realize there are people on the other side of the fence, hoping the company falls in stock price. The numbers of shares shorted and who is shorting them can be crucial in determining where the stock may be going.
You want to look at the institutional investors to understand where their money is going because it could be a good insight as to where they think the market is going to go. Along the lines of shares shorted, you may want to observe who is selling there stock at the company, such as executives. If they’re buying it, they may be confident that the company will continue to succeed.
When people evaluate stocks, they look to the upside and determine how far it can go. Using data they hear from reports or looking at a stock chart, they are trying to figure out what will propel the company further. However, there is the flip side to the equation that the average investor may not know, and that is the ability to short a stock. Shorting a stock is when you borrow the shares from your broker, sell them to the market, hoping to buy back at a lower price and return them to the broker, keeping the difference. Shares that are being shorted could indicate people are seeing indications the company stock could be pulling back.