Short Sellers Retreat as Short Interest in Major ETFs Declines

The Kobeissi Letter posted on X. Short sellers are retreating as short interest in major ETFs reaches historic lows. The short interest as a percentage of shares outstanding on the S&P 500 ETF ($SPY) has decreased to approximately 9%, marking one of the lowest levels in eight years. Similarly, the short interest in the Nasdaq 100 ETF ($QQQ) has fallen to around 6%, the lowest since at least 2018. Since the conclusion of the 2022 bear market, short interest levels for both ETFs have halved in 2023. Over the past two years, the average short interest has remained well below 10%, a significant drop compared to the 2018-2022 average of approximately 14%. This trend indicates that stock market short bets are facing significant pressure.