Short interest in the average S&P 500 stock is at the highest level since September 2012. And while that could point the way for stocks to dip in the near-term, it could actually serve as a contrarian indicator that suggests the equity rally has room to run.
Looking at all stocks in the S&P 500, the median stock has a short interest of 1.73 percent, far above the average median short interest, according to data analytics provider OTAS Technologies. This is just about the highest median short interest has been since September 2012. (OTAS prefers to look at median, rather than mean, short interest, because stocks with especially large or small short interest skew the latter measure.)