Long And Short Of Short Interest - Wednesday, July 25

Here is a brief review of period-over-period change in short interest in the July 2-13 period in nine S&P 500 sectors.

XLB (SPDR materials ETF)

 

After defending support at $57-plus late June, XLB ($58.72) subsequently rallied past both 50- and 200-day moving averages, but that did not last very long. The 50-day denied rally attempts the last several sessions, with the 200-day above. For now, the ETF remains trapped between $60 and $58, which respectively represent a falling trend line from late January and a rising one from late March.

XLE (SPDR energy ETF)

 

Resistance at $78-79 on XLE ($75.50) has proven tough to crack since last December, including one 10 sessions ago. The 50-day is gradually rolling over. The average was tested Tuesday – unsuccessfully. There is support at $74-plus, followed by $72.50-ish.

XLF (SPDR financial ETF)

 

In the second half of June, XLF ($28.02) short interest rose to a six-and-a-half-month high. Toward the end of that month, support at $26.50-ish was briefly breached, but turns out that was a false breakdown. July-to-date, the ETF is up 5.4 percent, helped by slight widening in the Treasury yield curve (10s/2s). It has even broken out of a falling trend line from late January. All good, except the daily chart is extended.

XLI (SPDR industrial ETF)

 

Toward the end of June, support at $71-ish was once again tested, and it held. The rally that followed did not deter the shorts a bit. XLI ($74.29) short interest rose to the highest since September 2015. At least near term, they can afford not to get afraid of a squeeze. The last several sessions, the 200-day repelled rally attempts. Near-term, daily momentum indicators are overbought.

XLK (SPDR technology ETF)

 

Yet another high on XLK ($73.32) – rose Tuesday to a new all-time high of $73.94 but closed poorly. During the reporting period, shorts continued to cut back. The daily chart is extended. Bulls need to defend Tuesday’s low of $73.01. Else, unwinding of overbought conditions can begin.

XLP (SPDR consumer staples ETF)

 

XLP ($52.63) rallied nicely since bottoming early May at just under $49, but resistance at $52.50-53 is yet to give away. Odds are the status quo continues near term. Shorts continue to stay on the sidelines, so there is not much chance of a squeeze. With daily conditions overbought, the MACD just developed a potentially bearish cross-under. Channel support lies at $51, which approximates the 50-day.

XLU (SPDR utilities ETF)

 

XLU ($52.10) short interest jumped to a four-month high. Since bottoming at north of $48 early June, the ETF rallied strongly, only to hit the wall just north of $53. There is support around $52, with the 200-day at $51.71. This needs to hold.

XLV (SPDR healthcare ETF)

 

Since early February, XLV ($87.73) bulls defended the $79 area several times before a sustained rally began early May. Shorts have been right in pretty much staying out of it. Near-term, the daily chart is overbought, but the bears need to push it under $87.50-ish to increase their chances.

XLY (SPDR consumer discretionary ETF)

 

XLY ($111.70) broke out of $109 early June, and rallied to a new intraday high of $113.31 last Wednesday. Shorts have lied low since early 2017. Rightly so. Last week’s high came in a long-legged doji session. The ETF is itching to go lower near term. Immediate support lies at $110.50, which is about where a rising trend line from early April gets tested. The 50-day rests at $109.36.