Most momentum traders are long-only and skip this. That is a mistake, because borrow conditions are one of the highest-lift preconditions we measure, and they are entirely observable before a move.
The three fields
- ·Availability: how many shares your broker can actually locate. Zero available means new short positions cannot be opened, so a move upward has no fresh supply of sellers to slow it.
- ·Fee: the annualised cost of holding the borrow. A fee above 30% is expensive; above 100% the short thesis has to be measured in days, not weeks.
- ·Reg SHO threshold list: names with persistent settlement failures over five consecutive days. Being listed is a public statement that delivery is failing.
For a long-side momentum trader, all three are the same question asked differently: if this name starts moving, is anyone structurally able to lean against it? When the answer is no, moves extend further than the fundamentals justify, which is precisely the condition you want.
What it does not tell you
Borrow scarcity is fuel, not ignition. Names sit on the Reg SHO list for weeks doing nothing. Our episode data puts a threshold listing at roughly 7.7× lift on the base rate: meaningful, and still nowhere near sufficient on its own. Pair it with a scheduled catalyst or accelerating chatter, or leave it on the watchlist.