• Research

Aug 15, 2016

S3 BLACKLIGHT: August SPY Trading Bearish, August IWM Trading Bullish

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
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.


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