European markets have risen sharply this year, helped by stronger local currencies and rallies in stocks. At the same time, short interest has climbed significantly, with some positions up 50%. This marks a major shift compared to the U.S., where short interest has moved lower in line with falling markets.

With all the focus of the US sell off, not enough attention has been paid to the changes in Europe.

First the European markets are considerably higher in local terms. (Including Brazil in table)

Second with the dollar lower and the European currencies higher, the European markets are way up YTD.

Third, the short interest as a percent of float is much higher.

Fourth when these are combined, the short interest notional are up as much as 50%

This increase in short position is a reversal strategy and changes the balance between US and European short interest.

The S&P short notional is down in proportional to the market decline.

These are the top 20 names with an increase in short interest notional.

The names are in all countries and sectors with Germany overrepresented.

In some cases, European short data reflects the dividend seasons as banks do dividend trades but in our data we found a negative correlation between dividend yields and changes in short interest notional.

That is those with higher dividend yields had smaller increases in short notional, and those with lower yields had higher increases, which means we have found a short situation not a dividend.

A substantial rise in European short positions highlights a reversal strategy gaining traction among investors. Unlike the U.S., where short activity has decreased, Europe's market strength and currency gains have triggered aggressive short positioning across multiple sectors and countries. Monitoring these dynamics will be critical for global portfolio adjustments.

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