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2018 volatility adjusts short sentiment

Short interest in the constituents of the S&P 500 index was more muted in the first quarter of 2018 relative to other recent periods of high volatility. The mid-February readings were comparatively low, likely because the downturn in the first few weeks drove January’s short sellers to cover their positions. The most recent data, as of March 15, shows a modest recovery in overall short interest as the market heads into first-quarter earnings season; median levels remain consistent with earlier 2018 numbers but below historical numbers. While investors certainly don’t see the bottom, the top may be in the rearview mirror.

The short-interest ratio measures the number of shares of a company sold short relative to its trailing 30-day average trading volume.