Rising Shorts, Rebounding Prices, and Battleground Risk Converge in XBI.

Summary: With shorts building and XBI crowding at key technical levels, the presence of 13 Battleground Stocks adds to the risk of outsized moves.

Price Trend: Since bouncing off the April low of $70, XBI has continued to make higher lows, currently trading above the

SMAVG (50), confirming the short-term price strength.

Support and Resistance: Recently tested resistance level at $91 (62% Fibonacci), with next support level at $87 (50% Fibonacci).

Momentum: RSI of 59 currently sits above its moving average, plus a positive MACD above zero indicates a supportive, yet not overbought reading.

Source: Bloomberg

Short Interest Insights:

Crowding: Short interest has climbed from 50M to 82M shares, a 60% increase, and now sits near the top of its 1-year range. The sharpest acceleration began after the April selloff, with shorts adding through the rebound, signaling persistent demand to be short and/or hedged.

Divergence: While price recovered from the $70s to $90s, the short interest kept rising. This may imply the XBI ETF is a hedge wrapper against single-name biotech risk. The trend of increasing shorts despite higher prices implies positioning, not just directional bearishness, is driving the short side.

Source: S3 Partners Black App

Battleground: XBI also carries 13 Battleground Stocks, including Viking Therapeutics (VKTX US), where short interest is 26% of float. Viking’s 42% plunge on disappointing obesity pill trial data underscores how Battleground dynamics contribute to XBI’s rising short base and heightened potential for outsized moves.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.