Is the market starting to guard against the "September Curse"? Goldman Sachs warns: short positions on the S&P 500 have surged, with bearish bets hitting a ten-year high.

Goldman Sachs' latest research indicates that short positions in S&P 500 index components have surged to their highest level since the 2008 financial crisis. The median short interest for stocks has risen to 3.2% of total market capitalization, while for stocks in the 90th percentile of short interest concentration, short positions have reached 8.0% of market cap. Both metrics have reversed the low stagnation seen in the early 2000s, showing a significant sharp upward trend. Data Overview: A Decade High, Yet Below Extreme Peaks of the Financial Crisis According to statistics from Goldman Sachs' prime brokerage business, the median short interest among S&P 500 components stands at 3.2% of total market capitalization, which Goldman categorizes as very high. For stocks in the 90th percentile of short positions, this figure is as high as 8%. Goldman Sachs historical comparative charts show that while current short-selling levels have reached a nearly ten-year high, they remain relatively moderate compared to the extreme peaks seen during the 2008-2009 global financial crisis when the median short interest approached approximately 3.8%. However, current levels are significantly higher than those during the 2000 internet bubble and the market peaks of 2021. The Triple DRIVERS of the Surge in Short Positions First, there has been a surge in macro hedging demand. Goldman Sachs' prime brokerage data reveals that short positions in U.S. macro products (indices and ETFs) have risen to their highest level in the past decade. In the face of geopolitical tensions, rising interest rate expectations, and market concerns over Septembers seasonal weakness in U.S. stocks, institutional investors are accelerating their hedging strategies through stock shorting or using put ETFs for risk avoidance. Second, defensive sectors are bearing the brunt. Short bets are no longer confined to the tech sector. While the information technology sector remains the largest net short concentration, short positions in the industrial, financial, and energy sectors are also increasing significantly. Third, directional bearishness exists alongside hedging. Sam Pierson, research director at S3 Partners, noted, The short-term trend is more likely to reflect active/directional short selling. Goldman Sachs also acknowledges that the current rise in short positions is partly driven by hedging activity rather than purely based on bearish beliefs regarding fundamentals. Technical Indicators Signal Warning, Septembers Curse Looms J.P. Morgan technical strategist Jason Hunter warned in a report released on August 24 that although U.S. stocks remain close to historical highs, multiple risk signals have emerged within the market. The S&P 500 recently reached a historic peak of 7816 points, but remains below the critical resistance zone of 7909 to 7935 points. Hunter pointed out that the momentum of the index is slowing near long-term channel resistance, and there has been a recent shift in market leadership, with existing AI-related leaders showing fragile technical patterns. The semiconductor sector is facing particularly grim circumstances. The Philadelphia Semiconductor Index (SOX) has retraced over 21% from its peak of 14655 points in early July, meeting the definition of a technical bear market. As of the market close on August 28, the SOX plunged 412.51 points (a decline of 3.47%) to close at 11469.66 points. J.P. Morgan warned that the resistance zone currently faced by the semiconductor index is the dividing line between a short-term dead cat bounce and a resumption of a multi-year upward trend. If it continues to trade below this area post-Labor Day, the semiconductor index could face a new wave of strong selling pressure throughout the fall. BTIG Chief Technical Strategist Jonathan Krinsky further noted that in 2026, there have been 57 trading days where price trends contradicted market breadth, tying with the last two years for the highest in nearly 30 years. To date this year, there hasnt been a single full sell-off day where the volume of declines exceeded 80%, indicating that the market has been lacking a decisive concentrated clearing, and the pressures for a systemic adjustment remain quietly building. Historical seasonal data provides solid backing for the current market warnings. Since 1928, the average return of the S&P 500 in September has been approximately -1.2%, making it the only calendar month with a long-term average return in the negative. About 56% of years recorded a decline. In down years, the average pullback is 7.35%. This seasonal weakness is even more pronounced during midterm election yearssince 1974, in all midterm election years, the median return of the S&P 500 from August 1 to Election Day in November has been 0%. BTIG's data further reveals a more severe pattern in midterm election years: since 1990, the equal-weighted S&P 500 index has dropped at least 7% during the August to October period of every midterm election year, except for 2006. This index typically peaks around August 18, followed by a challenging downward phase until mid-October.