Why Did We Believe the Acquisition Deal for Microsoft (NASDAQ:MSFT) of Speech Technology Company, Nuance Communications (NASDAQ:NUAN) was Imminent? People started to bet on a deal that Microsoft would pursue something. How did we know that? Because short volume, that is the percentage of daily trading volume coming from borrowed stock, dropped to what we call our deal threshold level at about 30%. It’s important to understand that about half of all market volume, around 45% of it, comes from borrowed stock. So, when you see a bunch of volume out there, half of that volume isn't coming from owners, it’s people furnishing borrowed stock. So, when that level drops to near 30% you can conclude two things. Number one, the cost to borrow that stock has risen and machines just go around the market scooping up cheap stuff to borrow and furnish to the market because they just want to inter-mediate the intraday volatility, which by the way in the S&P 500 is 300 basis points every day. People don't understand how much movement there is. So machines will inter-mediate that and go long and short based on how average prices are behaving. But when the cost rises you get excluded from a basket. And if there are deal arbs walking around and talking to people who actually are thinking (and who hold Microsoft) those owners may not want to loan their securities out. So the levels decline and we can look at what happened to Nuance as well and we will see a move.