The past few weeks saw money frighten out of markets. Stocks tumbled; haven assets surged. Understandably, traders are increasing their short bets on risky assets. Here we analyse some of the recent net-short data provided to the FCA (link).
One of the most heavily shorted UK stocks is Wood (John) Group (WG/). Perhaps investors are taking a dim view on energy-related sectors (see today’s analysis on energy prices here). A quick look at Wood Group’s share price instantly tells you something is not right about its chart. The stock broke out of its long-term range recently (500-900p), suggesting that the multi-year equilibrium has given way to a downtrend, with no downside support until 300p.
Another stock that is crumbling into new long-term lows is Marks & Spencer (MKS). Prices nosedived into decade lows recently, which suggests to me that traders are smelling blood here. The next round number support is at 200p (see below).
For AA Plc (AA), its trend remains steadfastly bearish. New price lows in the past few weeks meant short sellers have no reason to abandon the trade.
One interesting short candidate is Anglo American (AAL). Its share prices are remaining within an uptrend channel despite being heavily shorted. Technical support is noted at 1,800p.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.