The short selling ratio of the median 500 stocks has climbed to 3.0%, the highest level since 2012, exactly double the number of 2020 pandemic. More notably, the 10% of the stocks that were most shorted in the S&P 500 have seen their short ratio surge to 8.0%, the highest since 2018.
Both indicators have surpassed the level of the bear market after the burst of the science and technology bubble in 2000.
What does this represent? The market is not monolithic. The index is hitting new highs, but there are plenty of professional funds shorting and hedging at the individual stock level. This indicates that institutional investors are highly skeptical about the sustainability of the current rise - they follow the rise and are too afraid to be absent, while buying insurance crazily.
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