Short Selling Rout: 92% Of ETF Shorts Were Unprofitable In The Last Month
Portfolio Pulse from Neil Dennis
Short selling in ETFs has been largely unprofitable over the last month, with 92% of all ETF shorts losing money. The SPDR S&P 500 ETF (SPY) was the most heavily shorted and least profitable, with short sellers losing $5.5 billion as the ETF rose 11.2%. The Invesco QQQ Trust ETF (QQQ) and iShares Russell 2000 ETF (IWM) also saw significant losses for short sellers. Conversely, the Proshares Ultrapro Short QQQ ETF (SQQQ) was profitable for shorts, as were ETFs tracking the VIX index.
November 30, 2023 | 2:48 pm
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NEGATIVE IMPACT
IWM short sellers faced $1.6 billion in losses as the ETF, which tracks smaller companies, rose by 10%.
The IWM ETF's performance, reflecting investor optimism in smaller companies, led to losses for short sellers, indicating a negative short-term impact for those considering shorting IWM.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
QQQ short sellers lost $3 billion as the ETF appreciated by 14%, making it one of the least profitable shorts.
The rise in QQQ, driven by the tech sector's performance, resulted in significant losses for short sellers. This trend is likely to discourage short selling in the short term.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 90
NEGATIVE IMPACT
SPY short sellers lost $5.5 billion as the ETF gained 11.2% in the past month, making it the least profitable short.
With the SPY ETF experiencing a significant rise, short sellers who bet against it faced substantial losses. This negative performance for shorts suggests a bearish short-term impact on the sentiment towards shorting SPY.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Short sellers gained $221.9 million on SQQQ, the inverse ETF of QQQ, making it the most profitable short.
As an inverse ETF, SQQQ provided gains for short sellers, contrasting with the broader market trend. This could indicate a positive short-term impact for SQQQ as a shorting opportunity.
CONFIDENCE 80
IMPORTANCE 65
RELEVANCE 70