April Short Report: GLD Shorts Jump 62%

May 11, 2012

Short-sellers turned up the pressure on gold and emerging markets last month.

Short-sellers significantly increased their bets against gold last month, while taking pressure off large broad-based U.S. equity funds last month, a reflection perhaps of the rally in stocks that prevailed throughout the first quarter.

At the same time, the signals were a bit mixed, to the extent short-sellers also increased pressure on emerging markets and on the euro—signs that the risk-off trade made a comeback last month as anxieties about the eurozone resurfaced.

Short interest on SPDR Gold Shares (NYSEArca: GLD), the physical bullion ETF, rose 62.19 percent last month, after rising only 9.05 percent in March. However, the percentage of shorts relative to GLD’s outstanding long float still remains low in comparison with other funds on IndexUniverse’s “Big Bets” table, at 4.13 percent.

Short-sellers are cooling on emerging markets, especially Brazil, where the central bank is orchestrating a rate-cutting program that has weakened the real’s value in dollars and hurt returns for U.S. investors.

The iShares MSCI Brazil Index Fund (NYSEArca: EWZ) had a 24.89 percent increase in short interest last month. The broad iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) saw a 12.36 percent increase in short interest, which in part reflects concern about slowing growth in China.

Short interest on the CurrencyShares Euro Trust (NYSEArca: FXE), a long euro-dollar bet, meanwhile jumped more than 11 percent, as investor concerns turned to Spain’s and Italy’s solvency, and questions about Greece began to center on whether that heavily indebted southern European nation can remain in the eurozone.

Confidence In The US?

 

The bullish attitude toward U.S. stocks continued last month sparked in part by better-than-expected corporate earnings reports.

In the world of short-sellers, that translated into a 4 percent drop in short interest on the SPDR S&P 500 ETF (NYSEArca: SPY), which comes on top of a nearly 15 percent drop in the number of shorts on the fund in March.

The iShares Russell 2000 Index Fund (NYSEArca: IWM) saw a nearly 6 percent drop in short interest, and the Nasdaq 100 ETF, the PowerShares QQQ Trust (NasdaqGM: QQQ), had a 1.27 percent drop in short interest.

Really Really Short Table

We also look at ETFs with unusually high short interest, and the fund that’s always at the top of that list, the SPDR S&P Retail ETF (NYSEArca: XRT), saw a 12.75 percent increase in short interest—a reversal from March when the ETF’s short interest fell 4.3 percent.

XRT now has short interest representing 349.5 percent of its outstanding long float, a touch higher than in the prior month.

Short also bet heavily again the Market Vectors Bank and Brokerage ETF (NYSEArca: RKH), with short interest jumping more than 84 percent, bringing the percentage of short interest on its long float to more than 200 percent.

Finally, a standard caveat here at IndexUniverse: When taking in short interest data, it’s important to remember that data are buggy and flawed. Due to double-counting issues, it’s possible to have more reported short shares than actually exist in the market.

Still, short interest data are a great way to gauge sentiment.

Big Bets
Ticker Name % Float Short 1 Month % Change $Short ($, M)
SPY SPDR S&P 500 35.29 -4.13 36,389.35
IWM iShares Russell 2000 102.79 -5.91 16,029.12
QQQ PowerShares QQQ 16.29 -1.27 5,317.50
XLE Energy Select SPDR 41.79 -0.84 3,245.83
XRT SPDR S&P Retail 349.50 12.75 3,107.24
GLD SPDR Gold 4.23 62.19 2,897.09
TLT iShares Barclays 20+ Year Treasury Bond 85.10 3.59 2,486.08
EEM iShares MSCI Emerging Markets 4.96 12.36 1,897.88
XLI Industrial Select SPDR 53.47 1.94 1,817.13
EWZ iShares MSCI Brazil 21.03 24.89 1,795.28

 

Really Really Short
Ticker Name % Float Short 1 Month % Change $Short ($, M)
XRT SPDR S&P Retail 349.50 12.75 3,107.24
RTH Market Vectors Retail 221.62 -3.98 91.18
FXE CurrencyShares Euro 220.38 11.33 551.50
RKH Market Vectors Bank and Brokerage 200.88 84.15 47.53
DUST Direxion Daily Gold Miners Bear 3X 179.44 -8.22 13.17
XOP SPDR S&P Oil & Gas Exploration & Production 150.57 12.21 1,561.72
TMF Direxion Daily 20 Year Plus Treasury Bull 3x 136.72 25.04 22.03
KCE SPDR S&P Capital Markets 105.67 -5.19 38.27
IWM iShares Russell 2000 102.79 -5.91 16,029.12
RYH Guggenheim S&P Equal Weight Health Care 99.16 46.42 70.19

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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