Both the Spider S&P 500 ETF (SPY US) and the iShares Russell 2000 ETF (IWM US) traded with a bullish trend in July and were rewarded with 3.65% and 5.30% monthly returns. July short interest in the SPY ETF was down $4.7 billion, down 8%, while long holders added $14.2 billion of inflows. While the IWM ETF, which is over five times smaller than the SPY, had a $1.4 billion reduction in short interest, down 11%, and long holders added $999 million of inflows.
In August we are seeing a continuation of this bullish trend for the Russell 2000 IWM ETF while the S&P 500 SPY ETF is showing us a pronounced reversal of sentiment. Short interest for the IWM ETF has dropped $1.7 billion, down to $10.1 billion which is the lowest short interest level since mid-February and long holder inflows have increased $955 million for a total of $29.6 billion. On the other hand, short interest in the SPY ETF has increased $3.9 billion so far in August, or 7%, up to $56.5 billion and long holders sold $1.2 billion of the ETF to bring its market cap down to $201.6 billion.
While investors were bullish in both the large cap and broad indexes in July, it seems that while the bullishness is continuing in the broader index, there is definitely a bearish sentiment in S&P large caps.
For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC Ihor.Dusaniwsky@S3Partners.net
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