Why Short Interest in Williams Companies Indicates a Bullish Sentiment
Short interest in Williams Companies
Short interest in Williams Companies (WMB) as a percentage of float has come down to ~1.3% compared to ~1.4% in the previous week. Moreover, it is lower compared to its past one-year and three-year averages of 2.2% and 2.4%, respectively. This could indicate a bullish sentiment.
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The above chart shows the one-year closing price and short interest as a percentage of a float for WMB. Short interest is the number of shares sold short, and short interest as a percentage of float is the number of shares sold short divided by the number of floating shares.
A high short interest or sudden increase in short interest generally indicates pessimism about the stock. However, this may not necessarily result in a stock price decline as short position holders try to cover their short positions, which could result in a stock rally.
The Alerian MLP Index (AMZ), which tracks 50 energy MLPs, has an average short interest as a percentage of float of 3.4%. Short interest in WMB as a percentage of float ratio is below the industry average.
The put–call ratio is another measure to look at investors’ sentiment toward a stock. A high put–call ratio could indicate that a large number of investors expect the stock price to decline and vice versa. WMB has a put–call ratio that is close to zero.