Shorts See Market Bottom, Flee Financials (MER)(BAC)(LEH)(ABK)(WB)

Short sellers believe that they have seen the bottom for financial shares and exited the industry en masse.

Shares sold short in Merrill Lynch (MER) fell 12.6 million to 42.3 million. Short interest in Bank of America (BAC) dropped by 12.3 million to 112.8 million. Share short in Lehman (LEH) fell 11.5 million to 70.6 million. Short interest in Ambac (ABK) fell 8.3 million to 83.5 million. Shares short in Wachovia (WB) dropped 6.4 million to 271.9 million and the short interest in Wells Fargo (WFC) dropped 7.4 million to 165.8 million.

Short sellers also moved away from big tech. Shares short in Intel (INTC) fell 23.7 million to 82.6 million. The short interest in Dell (DELL) fell 4.7 million to 60.3 million. Shares short in Cisco (CSCO) fell 9.2 million to 60.1 million. Shares short in Sun (JAVA) dropped 11 million to 45.8 million. Short interest in Microsoft (MSFT) dropped 1.6 million to 54.2 million. Shares short in Motorola (MOT) dropped 13.9 million to 43.4 million. Short interest in AMD (AMD) dropped 13.4 million to 93.4 million.

Other major changes in short positions included an increase of share short in Juniper (JNPR) of 4.7 million to 26.5 million. Shares short in Starbucks (SBUX) dropped by 14.9 million to 37.6 million.

Short interest in Ford (F) dropped by 14.7 million to 311.3 million. Short interest in Sprint (S) rose 15.2 million to 88.5 million.

Douglas A. McIntyre