The short interest ratio (also called days-to-cover ratio)[1] represents the number of days it takes short sellers on average to cover their positions, that is repurchase all of the borrowed shares.
The ratio is used by fundamental and technical traders to identify trends.
[2] The days-to-cover ratio can also be calculated for an entire exchange to determine the sentiment of the market as a whole.
If an exchange has a high days-to-cover ratio of around five or greater, this can be taken as a bearish signal, and vice versa.
To cut their losses, short sellers may add to demand by buying shares to cover short positions, causing the share price to further escalate temporarily.