Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!
Data: S3 Partners; Chart: Axios Visuals

With the stock market again rising toward record highs, short sellers are moving back into technology shares and broad U.S. indexes with increasing confidence, betting that prices will fall and they will profit.

What's happening: After largely cashing out their bets at the end of the first quarter following the market crash in late March and pulling back in July and August, the renewed rise in stock prices has bears upping their bets again.

The backdrop: Stock market bulls, who believe prices will continue to rise, had been celebrating the apparent disappearance of short sellers in the third quarter, which is normally a sign that stock prices are set to increase.

  • However, that's not exactly what's happened, says Ihor Dusaniwsky, managing director of Predictive Analytics at S3 Partners.
  • "There may be less shares shorted in the market, but the overall value of short exposure in the market has remained relatively stable," he said in a recent note to clients.
  • Further, Dusaniwsky tells Axios, "short selling has been increasing across the board recently."

By the numbers: Between Oct. 1 and 15, short sellers added just over $80 billion in short interest on bets against the big four U.S. stock indexes — the Dow 30, S&P 500, Nasdaq 100 and Russell 3000, S3's data show.

  • Since the start of Q2, short sellers have added nearly $368 billion of short bets on the four indexes.

Why it matters: Short sellers have a long track record of correctly predicting the direction of the market over a 12-month horizon, according to Matthew Ringgenberg, a finance professor at the University of Utah.

  • In fact, he says his short-sale index, which measures the number of shares shorted in a given period compared to the overall trend, “is arguably the strongest known predictor of aggregate stock returns” for the next 12 months, in a recent article for Barron's.

Yes, but: Short sellers' accuracy has only proven itself over a 12-month period, Ringgenberg says. His index was significantly higher in June than it is now.

What it means: Short sellers are investors who rent stock to sell it on the open market, betting that it will fall and they can purchase it at a lower price and pocket the difference.

Go deeper

Nov 10, 2020 - Technology

European Union hits Amazon with antitrust charges

European competition commissioner Margrethe Vestager. Photo: Olivier Hoslet/Pool/AFP via Getty Images

EU regulators have filed antitrust charges against Amazon, claiming the company is acting anti-competitively when it uses data from sellers on its marketplace to develop its own products.

Why it matters: Europe could seek billions of dollars in fines from Amazon, and regulators' findings could inform the work of U.S. antitrust enforcers. The Federal Trade Commission reportedly started looking into Amazon's treatment of third-party sellers last year.

Updated 2 mins ago - Politics & Policy

Sen. Kelly Loeffler to return to campaign trail after 2nd negative test

Sen. Kelly Loeffler addresses supporters during a rally on Thursday. Photo: Jessica McGowan/Getty Images

Sen. Kelly Loeffler's (R-Ga.) campaign announced Monday that she "looks forward to getting back out on the campaign trail" after testing negative for COVID-19 for a second time, following earlier conflicting results.

Why it matters: Loeffler has been campaigning at events ahead of a Jan. 5 runoff in elections that'll decide which party holds the Senate majority. Vice President Mike Pence was with her on Friday.

Updated 4 hours ago - Politics & Policy

Key government agency says Biden transition can formally begin

General Services Administrator Emily Murphy. Photo: Alex Edelman/CNP/Getty Images

General Services Administrator Emily Murphy said in a letter to President-elect Joe Biden on Monday that she has determined the transition from the Trump administration can formally begin.

Why it matters: Murphy, a Trump appointee, had come under fire for delaying the so-called "ascertainment" and withholding the funds and information needed for the transition to begin while Trump's legal challenges played out.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!