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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Wednesday, March 07, 2001

Stock Focus: Betting Against The Bears

NEW YORK - Shares of Genesco, a Tennessee-based footwear and accessories retailing concern, have more than doubled from last May's 52-week low. But the stock is down 8% since peaking in mid-February. Where is this stock headed?

According to theories of market sentiment, the upward trend will probably continue. Commenting generally, Bernie Schaeffer, chief executive of Schaeffer's Investment Research, explains. "If you have a stock that's in clear bull-market mode," he says, "and you see strong indications of negative or bearish sentiment, that tells you the uptrend has a good chance of continuing." Schaeffer adds that "such a pattern shows there's still skepticism and money on the sidelines."

Schaeffer and his colleagues specialize in market sentiment indicators--measurements of investors' bullish or bearish mood. One popular indicator is short interest, or the percentage of a company's outstanding shares sold on the expectation that they can be repurchased at a lower price. Another is the put/call ratio, which compares the volume of put options to call options. A rising put/call ratio (sells/buys) generally indicates increasing skepticism about a particular stock.

Full story at Forbes.com