Short interest figures for the end of August were released on Tuesday, and as far as the overall trends were concerned, let’s just say that investors were quite nervous heading into what has historically been the stock market’s worst performing month.  To see our complete analysis of the recent results, sign up for Bespoke Premium or Bespoke Institutional now.   One sector where investors are particularly negative these days is in the Consumer Discretionary sector. Through the end of August, the average stock in the S&P 500 had 11.7% of its float sold short.  That’s the highest average short interest reading since March 2009!  Think about that for a minute — investors haven’t been this negative towards the Consumer Discretionary sector since the very beginning of the bull market!

The main culprit behind the high levels of short interest has been in the Retailing group, where average short interest levels currently stand at 15.6%.  That’s the highest level for this Industry Group since September 2008 when Lehman went bankrupt!

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The reason for the negative sentiment towards retail stocks is obviously the “Death by Amazon” trade as well as the shift in consumer preferences towards experiences over products.  Nowhere is this more evident than in the short interest levels of Multi-Line retailers.  Here, short interest levels have gone ‘hockey stick,’ surging from an already high level of 12% at the end of last year to an absurdly high level of 25.2% as of the end of September.  That kind of surge in such a short period of time is the type of move we saw in banks and brokerage stocks during the height of the financial crisis.

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