Market Timing

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>>> Short Sellers Who Won in Third-Quarter Stock Swoon Start Pulling Bets


Bloomberg

by Natalia Kniazhevich

11-1-23


https://www.msn.com/en-us/money/markets/short-sellers-who-won-in-third-quarter-stock-swoon-start-pulling-bets/ar-AA1jdJlK?ocid=ansmsnnews11&cvid=92aea4bd82c840e68a5672b5c5062935&ei=45


(Bloomberg) -- Short sellers who made a fortune during the third-quarter stock-market dive are starting to close those bets against the market as the seasonally strong months for equities arrive.

Total short interest in US and Canadian stocks dropped by nearly $66 billion at the end of October to $871 billion, according to financial data and technology firm S3 Partners. Investors backed off bearish bets across sectors with consumer discretionary, financials, health care and information technology notching some of the biggest declines.

“Short sellers have got an early Christmas present in the third quarter” Ihor Dusaniwsky, head of predictive analytics at S3 Partners said in a phone interview. From here, traders are not building up new positions “as they don’t want to lose what they made already.”

The S&P 500 Index sank 3.7% in the third quarter, punctuated by a 4.9% drop in September, while the tech-heavy Nasdaq 100 lost 3.1% in the third quarter, led by a 5.1% slide in September.

Both indexes continued to fall in October, albeit at a slower pace, with declines of more than 2% each for the month. But November is traditionally the second-strongest month of the year for stocks, so traders need to be disciplined, said Steve Sosnick, chief strategist at Interactive Brokers.

“Taking profits is a key part of that discipline,” Sosnick said. “But unless we get a meaningful reversal in the bond market, it’s hard to expect a big rally in stocks.”

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