HCA Healthcare Inc.(HCA) is set to report earnings on October 25. The short position has dropped significantly, historically signaling negative returns after earnings. The market expects a larger-than-usual move this time, with an implied 7% change versus the usual 4%.

HCA is reporting 10/25. The short position is at a quarterly low and the short position has fallen significantly recently 9%, much larger than the moves before earnings.

Historically a falling short position before earning has been followed by negative returns after earnings, which is the shorts are usually wrong.

The stock is up only 1% the past week and historically its not predictive at any level.

HCA usually moves 4% on earnings and is expected to move 7% this time as the market is expecting a larger move than average.

HCA’s sharp decline in short interest historically signals potential downside post-earnings, in the context of a market expectations for a large move.

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