# Technical Analysis from A to Z

by Steven B. Achelis

PUBLIC SHORT RATIO

Overview

The Public Short Ratio ("PSR") shows the relationship between the number of public short sales and the total number of short sales. (The Public Short Ratio is sometimes referred to as the non-member short ratio.)

Interpretation

The interpretation of the PSR assumes one premise: that of the short sellers, the public is the worst (well, except for the odd lot traders whose indicators begin with the Odd Lot Balance Index). If this is true, then we should buy when the public is shorting and sell when the public is long. Historically, this premise has held true.

Generally speaking, the higher the PSR, the more bearish the public, and the more likely prices will increase (given the above premise). Historically, it has been considered bullish when the 10-week moving average of the PSR is above 25% and bearish when the moving average is below 25%. The further the moving average is in the bullish or bearish territory, the more likely it is that a correction/ rally will take place. Also, the longer the indicator is in the bullish/bearish territory, the better the chances of a market move. For more information on the PSR, I suggest reading the discussion on the non-member short ratio in Stock Market Logic, by Norman G. Fosback.

Example

The following chart shows the New York Stock Exchange Index and a 10-week moving average of the Public Short Ratio.

The PSR dropped below 25% into bearish territory at the point labeled "A." Over the next several months, the PSR continued to move lower as the public became more and more bullish. During this period, prices surged upward adding to the bullish frenzy. The subsequent crash of 1987 gave the public a strong dose of reality.

Since the crash of 1987, the PSR has remained high, telling us that the public doesn't expect higher prices--a bullish sign.

Calculation

The Public Short Ratio is calculated by dividing the number of public short sales by the total number of short sales. The result is the percent-age of public shorts.

*Technical Analysis from A to Z*is reproduced here with permission from the author and publisher.

### Contents

- Preface
- Acknowledgments
- Terminology
- To Learn More
- Bibliography
- About the Author
- Technical Analysis
- Price Fields
- Charts
- Support & Resistance
- Trends
- Moving Averages
- Indicators
- Market Indicators
- Line Studies
- Periodicity
- The Time Element
- Conclusion
- Absolute Breadth Index
- Accumulation/Distribution
- Accumulation Swing Index
- Advance/Decline Line
- Advance/Decline Ratio
- Advancing-Declining Issues
- Advancing, Declining, Unchanged Volume
- Andrews' Pitchfork
- Arms Index
- Average True Range
- Bollinger Bands
- Breadth Thrust
- Bull/Bear Ratio
- Candlesticks - Japanese
- CANSLIM
- Chaikin Oscillator
- Commodity Channel Index
- Commodity Selection Index
- Correlation Analysis
- Cumulative Volume Index
- Cycles
- Demand Index
- Detrended Price Oscillator
- Directional Movement
- Dow Theory
- Ease of Movement
- Efficient Market Theory
- Elliott Wave Theory
- Envelopes (Trading Bands)
- Equivolume/Candlevolume
- Fibonacci Studies
- Four Percent Model
- Fourier Transform
- Fundamental Analysis
- Gann Angles
- Herrick Payoff Index
- Interest Rates
- Kagi
- Large Block Ratio
- Linear Regression Lines
- MACD
- Mass Index
- McClellan Oscillator
- McClellan Summation Index
- Median Price
- Member Short Ratio
- Momentum
- Money Flow Index
- Moving Averages
- Negative Volume Index
- New Highs-Lows Cumulative
- New Highs-New Lows
- New Highs/Lows Ratio
- Odd Lot Balance Index
- Odd Lot Purchases/Sales
- Odd Lot Short Ratio
- On Balance Volume
- Open Interest
- Open-10 TRIN
- Option Analysis
- Overbought/Oversold
- Parabolic SAR
- Patterns
- Percent Retracement
- Performance
- Point & Figure
- Positive Volume Index
- Price and Volume Trend
- Price Oscillator
- Price Rate-of-Change
- Public Short Ratio
- Puts/Calls Ratio
- Quadrant Lines
- Relative Strength, Comparative
- Relative Strength Index
- Renko
- Speed Resistance Lines
- Spreads
- Standard Deviation
- STIX
- Stochastic Oscillator
- Swing Index
- Three Line Break
- Time Series Forcast
- Tirone Levels
- Total Short Ratio
- Trade Volume Index
- Trendlines
- TRIX
- Typical Price
- Ultimate Oscillator
- Upside/Downside Ratio
- Upside/Downside Volume
- Vertical Horizonal Filter
- Volatility, Chaikin's
- Volume
- Volume Oscillator
- Volume Rate-of-Change
- Weighted Close
- Williams' Accumulation/Distribution
- Williams' %R
- Zig Zag