Short interest in the Russell 2000 ETF (IWM) has consistently fluctuated between a support level of 77MM shares and a resistance level of 89MM. Historical trends show price declines when short interest peaks, reinforcing a momentum-based shorting strategy. With short interest pulling back from resistance, this could indicate a short-term bullish signal for IWM.

Looking back over the past 52 weeks, IWM short interest support level is 77MM shares and resistance level is 89MM. The red arrows indicate the 11MM share support/resistance zone.

Note when SI peaks, there is a subsequent decrease in IWM price performance, displaying a momentum strategy by shorts (shorting as price falls, covering as price rises).

Also note the quick pullback into the zone after the breakouts from resistance in August ‘24 and February ‘25.

The recent SI trend reversing off its resistance level and trading back into the zone back towards support, can be looked at as a potential short-term bullish signal.

We have yet to see polarity on IWM, where former resistance levels (89MM) become support (and vice versa).

IWM’s short interest levels provide clear technical signals, with historical price action reinforcing the relationship between short positioning and market momentum. The recent pullback from resistance suggests potential short-term upside, though a true polarity shift—where former resistance becomes support—has yet to materialize. Investors should monitor these levels closely for further confirmation.

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