As retail investors aggressively buy US stocks on the dip, hedge funds are ramping up their short positions. Following President Trump’s announcement of a 90-day tariff suspension, US stocks experienced a significant rebound, with retail investors pouring in $5.4 billion (approximately NT$163.08 billion) on Monday to buy the dip, setting a new record. However, during this same time, hedge funds have significantly increased their shorting.

According to the COT (Commitments of Traders) report, the amount shorted over the past three periods reached $25 billion (approx. NT$755 billion), marking the largest shorting scale in at least a decade. Chinese financial media outlet “Wall Street News” reported that while retail investors rush in to buy stocks, ignoring negative news and uncertainty, hedge funds are heavily shorting. Goldman Sachs trader Quinn noted that despite the Nasdaq index performing well over the past few weeks, new short positions have significantly outnumbered long positions, which is surprising.

Data from the COT report for the period from May 6 to 13 showed massive shorting of $11.1 billion (approx. NT$335.22 billion). Although there was also $4.2 billion (approx. NT$126.84 billion) in buying, the overall net long positions decreased by $6.9 billion (approx. NT$208.38 billion).

Quinn discovered that hedge funds were the primary short sellers, with a net selling amount reaching $7.3 billion (approx. NT$220.46 billion), and shorting surged by $9.4 billion (approx. NT$283.88 billion). Goldman Sachs indicated that while hedge funds are increasing their short positions, this does not necessarily reflect market directional judgment, and may also serve as an arbitrage operation to hedge other long positions. Nevertheless, the scale of hedge fund shorting is unprecedented, highlighting their skepticism regarding a potential rise in the US stock market. The cumulative short amount for hedge funds has reached $25 billion, the largest scale in at least a decade according to the latest three COT reports.