EEM has had a strong week — up 5.1% to $69.10 — and the short side is showing real signs of retreat, making this one of the more interesting positioning stories in broad ETF land right now.
The headline shift is in short interest, which has dropped sharply over the past month. Bears who piled in aggressively through mid-August have been unwinding. Short interest peaked near 19.4% of float in late August, then fell to around 16.2% — a decline of roughly 13.5% in shares short over the past 30 days. The week-on-week reading is essentially flat, suggesting the bulk of that covering has already happened. That 30-day unwind aligns almost perfectly with the price rally, pointing to a classic squeeze dynamic: shorts built into a down move, got caught as the ETF recovered, and covered at a loss.
The lending market tells a complementary story — one of easing rather than stress. Borrow availability is ample at roughly 697% of shares already borrowed, meaning the pool of shares available to lend is nearly seven times the current short position. That's well within normal territory, and a long way from the tightness that defined the August spike. Cost to borrow has also fallen, down 17% on the week to just 0.35% annually — effectively free money for anyone still holding a short. That combination of falling short interest, loose availability, and cheap borrow rates paints a picture of a market where the conviction shorts have cleared out and the remaining position is largely mechanical or hedging-driven.
Options positioning adds another layer of nuance. EEM's put/call ratio is running at 1.86 — structurally elevated, and right in line with its 20-day average. The z-score is essentially zero, meaning there is no unusual skew versus recent history. The 52-week range for the PCR runs from 1.05 to 2.13, so the current reading sits in the upper half but well off the highs. In plain terms: options traders on EEM chronically favour puts over calls, likely as a hedge rather than directional conviction. This week that dynamic has not intensified despite the rally, which is itself telling — if the squeeze were generating fresh fear, you would expect the PCR to spike. It has not.
The institutional picture is consistent with the hedging narrative. Morgan Stanley holds the largest disclosed position at 7.65% of shares, and added roughly 4.7 million shares as of the June quarter. Bank of America added nearly as many. Barclays and Goldman each added over 2-3 million shares. These are not long-only asset managers making directional bets; they are dealer and broker-dealer books, and their EEM positions likely back derivative or structured product activity. The high PCR ratio and elevated short interest both look more like hedging infrastructure than speculative bearishness.
The ORTEX short score of 53.3 sits in the middle of its recent range — off the week-high of 55.6 seen on September 11. That peak coincided with a brief uptick in short interest around that date. The subsequent easing tracks the price rally. With no near-term earnings catalyst (this is an ETF), what to watch next is whether the September 11 short interest rebuild was temporary or the start of a fresh directional bet — and whether the still-elevated PCR begins to normalise as the rally extends.
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