CFA Level 1: Specialists' Short Sales Ratio and Technicians' View

Specialists' Short Sales Ratio

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If the ratio of specialists' short sales to total short sales is 25%, then technicians would view this as

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E

Technical analysts trying to follow the "smart money" sometimes use the proportion of specialists' short sales to total short sales as a market indicator. A decline of the ratio below 30% is viewed as a bullish sign, indicating that specialists are trying to minimize participation in short sales in expectation of a rising market. A increase in the ratio above 50%, conversely, is viewed as a bearish sign.