Member and public short selling
by Arthur A. Merrill
Total short sales figures, published by the New York and American stock exchanges, are a useful set of
figures for gauging market moods. Total short sales figures are reported in The Wall Street Journal and
Barron's. Exchange members and non-members, or the public, make up the total short sales figures.
You can calculate the total exchange member figures by adding the specialist, floor traders and other
member numbers. Deduct member data from the total and you have a figure for the non-members or
Some analysts report "members total" and "public short sales" figures as a percentage of the total short
interest. These percentages compare the relative size of the member short sales to the public short sales,
but conceal the absolute values. This makes it difficult to tell whether the shorting is light or heavy.
For this reason, I prefer to express the short selling as a percentage of the trading volume on a given day.
This is the usual method of expressing the monthly short interest. It reveals the size of the shorting,
corrected for the volume of trading. You can then compare the public and member shorts to find out who
is doing the shorting. You get double duty from the data.
The separation of member and public short sales is revealing. It shows the degree of pessimism of the
smart money and the not-so-smart money.