Short interest is a term used to describe how many short positions are open for a given security or market at a given time. It is often expressed as a percentage of the total securities outstanding and is used for the short interest ratio.
This serves as a gauge of bearish market sentiment, since short-sellers are expecting price action to trend downward. The short interest ratio (SIR) provides a context for the quantity of short interest outstanding by stating this amount in relation to the average daily trading volume.
This effectively shows how many days it would hypothetically take at the normal trading volume to cover the open short positions, and SIR is also called "days to cover" for this reason. The demand for shares to cover short positions may actually push prices upwards in a phenomenon called a "short squeeze."