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Low Level of Short Interest in SPY is Negative for Stock Market

Low Level of Short Interest in SPY is Negative for Stock Market.  The short interest in the S&P 500 ETF (SPY), which tracks the S&P 500, is at its lowest level in two years (see chart). That means many investors who use this this instrument to hedge against  a market drop, have lost all fear of a downturn and see the market as continuing to move up.  Historically, that’s usually a contrarian indicator that there’s trouble ahead for stocks.

Low Level of Short Interest in SPY is Negative for Stock Market
Low Level of Short Interest in SPY is Negative for Stock Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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