Odd-Lot Short Sales  (NYSE Members Report)

The NYSE Members Report is compiled by the SEC and issued about two weeks after the applicable date.

Every short seller anticipates a declining stock market. A profit is made if the stock is bought back at a lower price than when it was sold short. Odd lot transactions are made by small investors who can not afford to buy or sell short a round lot of 100 shares of a stock. In the old days this indicator reflected the shorting activity of the smallest of the small guys who were usually dead wrong at bottoms and tops. Since the introduction of options however it has lost a lot of its value. Many traders also sell in 99-share lots in fast markets for a better execution of their orders. Year-end tax selling and subsequent reinvestment distort the odd lot statistics as well  in the end of December and  early in January every year. But the odd lot short sales are nevertheless an excellent indicator to measure prevailing negative sentiment in the market. The chart below shows the weekly odd-lot short sales on a 4-week moving average.