Ability to Short ETFs Gives Insight Into Sectors | ETF Trends

Shorting a stock indicates how sellers view a particular company, but with the ability to short Exchange Traded Funds, one can now bet on entire sectors.  Morgan Stanley  reported top performing sectors held the highest level of short interest last month.  Could this be a predictor of future sector trends?

Most-shorted ETFs in September, relative to total assets

Fund Short interest 13-week return 1-year return 3-year return (not annualized)
Retail HOLDRS 308% -8.9% 0.95% 21.7%
Regional bank HOLDRS 162% -4.51% -0.80% 27.0%
iShares Lehman 20+ year Treasury 132% n/a 6.21% 22.3%
Oil service HOLDRS 126% 4.78% 39.2% 103%
iShares DJ U.S. real estate 120% -7.48% 13.7% 90.3%

Source: Morgan Stanley Equity Research

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.