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Oct. ETF Short Report: TLT Shorts Jump 17%

Olly Ludwig

Short-sellers turned up the heat on long-dated U.S. Treasurys last month, when prices of equities themselves pulled back amid concern about the eurozone debt crisis and economic data that was looking weaker than it had earlier in the year.

The fact that short interest on the iShares Barclays 20+ Year Treasury Bond Fund (TLT) jumped more than 17 percent last month suggests that some investors might be looking past weak stocks and focusing instead on how a reacceleration of growth might put upward pressure on long-term bond yields. In September, shorts on TLT dipped 11.5 percent, according to data compiled by IndexUniverse.

The Federal Reserve, through various policy initiatives, has vowed to keep official interest rates and long-term bond yields low to help encourage borrowing, and thus, economic activity. But concern continues to course through the bond market that all the central bank’s easy-money policies are creating big risks of inflationary pressure. The jump in TLT shorts tells that tale to some extent.

Among other noteworthy changes in short interest was the nearly 40 percent jump in the number of shares of the PowerShares QQQ Trust (QQQ), after a 2.5 percent increase in September .

Additionally, short interest in the CurrencyShares Euro ETF (FXE) rose 5 percent last month, after rising more than 15.5 percent in September.

That’s consistent with some of the renewed concern about the ability of southern European countries like Greece and Spain being able to continue to work their ways out of serious debt at a time when austerity measures are carrying the day.

Separately, the shares short in the SPDR Retail ETF (XRT), the poster child of excessive shorting in the ETF market , dropped almost 18 percent in October, after declining 14 percent in September.

XRT’s short interest relative to the outstanding long float—at just over 250 percent at the end of last month—has been steadily, if unevenly, moving lower in the past year. That number was as high as 600 percent in the summer of 2011.


It’s important to remember that short interest data are buggy, and flawed, as IndexUniverse Director of Research Dave Nadig likes to say.

For example, because of double-counting issues, it’s possible to have more reported short shares than actually exist in the market.

That said, looking at the short data is still a decent way to gauge market sentiment.

Big Bets
Ticker Name % Float Short 1 Month % Change $Short ($, M)
SPY SPDR S'P 500 27.34 2.99 29,811.29
IWM iShares Russell 2000 75.27 3.01 12,544.19
QQQ PowerShares QQQ 12.62 39.63 3,870.83
GLD SPDR Gold 4.23 3.01 3,124.51
XLE Energy Select SPDR 41.33 2.30 2,991.85
EEM iShares MSCI Emerging Markets 6.07 0.80 2,312.87
TLT iShares Barclays 20+ Year Treasury Bond 64.27 17.33 1,966.37
IYR iShares Dow Jones U.S. Real Estate 33.56 -0.74 1,704.19
XRT SPDR S'P Retail 256.25 -17.83 1,548.76
DIA SPDR Dow Jones Industrial Average Trust 14.28 13.96 1,473.03


Really Really Short
Ticker Name % Float Short 1 Month % Change $Short ($, M)
XRT SPDR S'P Retail 256.25 -17.83 1,548.76
RTH Market Vectors Retail 252.10 3.45 41.79
FXE CurrencyShares Euro 220.95 5.06 582.94
XOP SPDR S'P Oil ' Gas Exploration ' Production 186.89 13.46 1,452.12
FXY CurrencyShares Japanese Yen Trust 182.14 -1.04 235.12
RKH Market Vectors Bank and Brokerage 150.97 -0.58 34.64
FDTS First Trust Developed Markets ex-US Small Cap AlphaDEX 102.11 4,528.92 1.51
KRE SPDR S'P Regional Banking 80.88 54.73 975.22
IWM iShares Russell 2000 75.27 3.01 12,544.19
VZZB iPath Long Enhanced S'P 500 VIX Mid-Term Futures ETN (II) 70.46 -1.84 0.56


Ticker Name Short Interest Ratio 1 Month % Change $Short ($, M)
RKH Market Vectors Bank and Brokerage 150.97 -0.58 34.64
FDTS First Trust Developed Markets ex-US Small Cap AlphaDEX 102.11 4,528.92 1.51
KCE SPDR S'P Capital Markets 32.45 -4.22 5.86
DRGS RBS Global Big Pharma ETN 11.61 -1.90 0.55
JJU iPath Dow Jones-UBS Aluminum Total Return ETN 11.24 -1.81 0.36
BUNT PowerShares DB 3X German Bund Futures ETN 6.87 115.91 2.92
UINF ProShares UltraPro 10 Year TIPS/TSY Spread 6.64 -2.92 0.27
TAGS Teucrium Agricultural 2.24 14.61 0.06
BNPC STREAM S'P Dynamic Roll Global Commodities 1.44 5.89 0.24
TRSY PIMCO Broad U.S. Treasury 0.47 140.69 0.09


Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

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