Market Overview

ETF Short Sellers Targeting Small Caps, Tech Stocks

ETF Short Sellers Targeting Small Caps, Tech Stocks

Tech stocks once again led the market lower on Wednesday as the difficult September for Wall Street continued.

There is currently $185 billion in aggregate ETF short interest in the U.S. market, up from just $154 billion in March, according to S3 Partners. S3 analyst Ihor Dusaniwsky said Tuesday that ETF short interest has increased by $1.1 billion in the past week alone.

Most Shorted ETFs: By far the most heavily shorted ETF is the SPDR S&P 500 ETF Trust (NYSE: SPY). The SPY ETF tracks the S&P 500 and represents a simple bet against the U.S. stock market and/or a hedge against long positions in U.S. stocks. Here are the top four most shorted U.S. ETFs, according to S3:

  • SPY ETF, $50 billion in short interest.
  • PowerShares QQQ Trust, Series 1 (NASDAQ: QQQ), $16.5 billion in short interest.
  • iShares Russell 2000 Index (NYSE: IWM), $15.6 billion in short interest.
  • iShares MSCI Emerging Markets ETF (NYSE: EEM), $5.6 billion in short interest.

Recent Short Seller Targets: Overall, Dusaniwsky said traders have been ramping up diversified exposure to tech stocks in the past month.

“Tech stocks, which have been the backbone of this year’s rally, have been cooling off recently and short sellers are looking for exposure to the sector rather than throwing darts and hoping to pick the individual securities that are poised for a pullback,” he said.

Here are the four ETFs with the highest increases in short interest in the past 30 days:

  • IWM ETF, +$1.2 billion.
  • QQQ ETF, +$1.1 billion.
  • Technology Select Sector SPDR Fund (NYSE: XLK), +$349.3 million.
  • iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: HYG), +$340.4 million.
  • Short Covering ETFs: But while short sellers are generally leaning into the market sell-off, some ETFs have also been experiencing heavy short covering as well. Here are the ETFs with the largest drops in short interest in the past 30 days:
  • SPY ETF, -$3.7 billion.
  • iShares Core MSCI EAFE ETF (BATS: IEFA), -$383 million.
  • Vanguard Total Stock Market Index Fund ETF (NYSE: VTI), -$309.3 million.
  • Utilities Select Sector SPDR Fund (NYSE: XLU), -$306.5 million.

Benzinga’s Take: The general theme of the information above is that investors are betting against riskier high-growth tech stocks and small-cap stocks. At the same time, they are reducing short exposure to diversified, broad market ETFs and defensive sectors, such as Utilities.

Related Links:

Short Sellers Piling Into Chinese Stocks As Trade Tensions Rise

Short Sellers Have Lost Nearly $1.3B On DraftKings, Penn National


Related Articles (IWM + QQQ)

View Comments and Join the Discussion!

Posted-In: Ihor Dusaniwsky S3 PartnersAnalyst Color Short Ideas Top Stories Analyst Ratings Trading Ideas ETFs Best of Benzinga

Latest Ratings

DCTRBC CapitalMaintains51.0
INMDCanaccord GenuityMaintains51.0
HXLCanaccord GenuityMaintains36.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at