The potential demise of a multi-year bull market in stocks may have brought the bears out of hibernation, at least by one technical measure.
The Thomson Reuters U.S. Most Shorted Index, which tracks the performance of U.S. stocks with a large accumulation of bearish bets against them, is a makeshift benchmark of how long or short the market is.
As it happens, the index has fallen over 13.5 percent this year, and is now down a whopping 45 percent from a 2014 high. Currently, the Reuters benchmark hovers at the lowest levels since the index's origination in early 2013, which coincides with the market's big move to the upside this week.
"It has acted as a sort of "canary in the cave" many times over the past couple of years, as it seems to detect uneasiness even before the broader markets do," said Phil DeFrancesco, the creator of the Most Shorted Index and head of Thomson Reuters' global equities desktop division.
"This Index is showing that investors have been getting increasingly uneasy for a few months before the recent selloff," he added. DeFrancesco noted that last year, just before blue chips rallied to their highs, the Most Shorted benchmark "severely" underperformed.
The index's performance compares to the broader S&P 500 Index, which is down 6.7 percent year to date, and is about 10 percent from an all-time high set in May last year.