Overall, of the $734 billion of short interest in the U.S. markets five of the top ten most shorted sub-industries in the U.S. markets are Tech related. Tech sectors were also the leaders in both increase and decreases in shares shorted over the past week.
Shares shorted decreased by -$7.67 billion over the last week.
Looking at the Tech related sectors that had significant moves in short selling and short covering we see the following stock activity:
Visa is reversing the short selling trend we saw earlier in the month with over $1 billion in short covering. The overwhelming trend of contactless cashless transactions is being viewed as a positive for future earnings growth in stocks like V and MA. Square is seeing some additional short selling over the last month as its stock is looking over bought in the short term.
Continued short covering throughout the Systems Software sector as these building block tech stocks see future revenues increasing as growth in the software sector will expand into more areas of the economy.
As popularity of various applications such as Ring, Zoom and Citrix continues to grow, short sellers are selectively trimming their short exposure in these names.
Shorts are lowering their exposure to AMD, INTC, MCHP & TXN while increasing their exposure to NVDA.
Short selling in the Integrated Telecomm Services sector has been declining over the last month as usage soars during the Covid quarantine.
One technology sector with increased short selling in the Technology Hardware, primarily due to recent short selling in Apple. There was $682 million of short covering in the three weeks prior to this past week’s $334 million worth of short selling as Apple’s stock price leveled off below $290/share price. Shorts are looking at this “sticking point” as a sign of buyer exhaustion and a heightened possibility of at least a temporarily pullback in its stock price.
By using our Black App and Blacklight SaaS platform to see weekly moves in shares shorted, investors can see trends on the short side starting and ending. Giving them an additional metric to use in executing trade inceptions and conclusions. Just as bad as missing out on the early profits by getting ahead of the bulk of the trading herd, is being one of the last men standing in a trade and seeing profits eroded on an exit that is made too late.
Want deeper insight into the above analysis?
Contact: Ihor.Dusaniwsky@S3Partners.com
Managing Director Predictive Analytics, S3 Partners, LLC
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