1 Short interest in Nasdaq over-the-counter stocks rose 6% as of mid-October, its biggest jump since 6.3% last April.
2 The most recent OTC short interest statistics were compiled Oct. 13, the day the Nasdaq composite index slid 3% and the New York Stock Exchange tumbled 7%.
3 The coincidence might lead to the conclusion that short-sellers bet heavily on that day that OTC stocks would decline further.
4 As it happens, the Nasdaq composite did continue to fall for two days after the initial plunge.
5 However, the short interest figures reported by brokerage and securities clearing firms to the National Association of Securities Dealers include only those trades completed, or settled, by Oct. 13, rather than trades that occurred on that day, according to Gene Finn, chief economist for the NASD. Generally, it takes five business days to transfer stock and to take the other steps necessary to settle a trade.
6 The total short interest in Nasdaq stocks as of mid-October was 237.1 million shares, up from 223.7 million in September but well below the record level of 279 million shares established in July 1987.
7 The sharp rise in OTC short interest compares with the 4.2% decline in short interest on the New York Stock Exchange and the 3% rise on the American Stock Exchange during the September-October period.
8 Generally, a short seller expects a fall in a stock's price and aims to profit by selling borrowed shares that are to be replaced later; the short seller hopes the replacement shares bought later will cost less than those that were sold.
9 Short interest, which represents the number of shares borrowed and sold, but not yet replaced, can be a bad-expectations barometer for many stocks.
10 Among 2,412 of the largest OTC issues, short interest rose to 196.8 million shares, from 185.7 million in 2,379 stocks in September.
11 Big stocks with large short interest gains as of Oct. 13 included First Executive, Intel, Campeau and LIN Broadcasting.
12 Short interest in First Executive, an insurance issue, rose 55% to 3.8 million.
13 Intel's short interest jumped 42%, while Campeau's increased 62%.
14 Intel makes semiconductors and Campeau operates department-store chains and is strained for cash.
15 Meritor Savings again had the dubious honor of being the OTC stock with the biggest short interest position on Nasdaq.
16 Meritor has headed the list since May.
17 First Executive and troubled Valley National Corp. of Arizona were next in line.
18 Short selling isn't necessarily bad for the overall market.
19 Shorted shares must eventually be replaced through buying.
20 In addition, changes in short interest in some stocks may be caused by arbitrage.
21 For example, an investor may seek to profit during some takeover situations by buying stock in one company involved and shorting the stock of the other.
22 Two big stocks involved in takeover activity saw their short interest surge.
23 Short interest in the American depositary receipts of Jaguar, the target of both Ford Motor and General Motors, more than doubled.
24 Nasdaq stocks that showed a drop in short interest included Adobe Systems, Class A shares of Tele-Communications and takeover targets Lyphomed and Jerrico.
25 The NASD, which operates the Nasdaq computer system on which 5,200 OTC issues trade, compiles short interest data in two categories: the approximately two-thirds, and generally biggest, Nasdaq stocks that trade on the National Market System; and the one-third, and generally smaller, Nasdaq stocks that aren't a part of the system.
26 Short interest in 1,327 non-NMS securities totaled 40.3 million shares, compared with almost 38 million shares in 1,310 issues in September.
27 The October short interest represents 1.04 days of average daily trading volume in the smaller stocks in the system for the reporting period, compared with 0.94 day a month ago.
28 Among bigger OTC stocks, the figures represent 2.05 days of average daily volume, compared with 2.14 days in September.
29 The adjacent tables show the issues in which a short interest position of at least 50,000 shares existed as of Oct. 13 or in which there was a short position change of at least 25,000 shares since Sept. 15 (see accompanying tables -- WSJ Oct. 25, 1989).

Short interest in Nasdaq over - the - counter stocks rose 6 % as of mid - October , its biggest jump since 6 . 3 % last April .
its biggest jump since 6 . 3 % last April .
Why did it make such a big jump?