Reversal: Japan. Momentum: Mexico, Taiwan and the U.S.

• In some ETFs, investors short as prices rise and cover as they fall, reflecting a reversal, hedging, or value-oriented strategy.

• In other ETFs, investors short as prices decline and cover as they rebound, consistent with a momentum strategy.

• The graph shows the correlation between changes in price and changes in short interest. EWW (Mexico) and EWT (Taiwan) exhibit momentum patterns, while EWJ (Japan) displays a reversal pattern.

• SPY (S&P 500) is not extreme, but it also follows a momentum-driven pattern.

• SPY has negative correlation, a momentum strategy with shorting on the way down.

• EWJ (Japan ETF) has a positive correlation, suggesting shorting during price increases— a hallmark of reversal behavior.

• EWW has a negative correlation, consistent with momentum-driven shorting on declines.

• EWT also has a negative correlation, consistent with momentum-driven shorting on declines.

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