Shorts have built increasingly bearish positions in the U.S. Homebuilders ETF, with “higher for longer” rates and deteriorating affordability pressuring the cyclical sector in the near term. However, positive technical momentum is starting to appear.

Short Interest is Elevated:

• XHB short interest has risen to 10.53 million shares, a 75% increase since March and the highest in over a year.

Bears pressing into recent strength:

• Despite a ~20% rally from April lows, short sellers have added exposure – suggesting crowded conviction.

Technical Breakout levels matter:

• XHB recently broke above a key resistance level of $101.60 (38% Fibonacci) with volume confirmation (important!). Immediate new resistance level is $106.17 (50% Fibonacci)

Momentum check:

• MACD: MACD 1.6 > Signal .9, recent bullish crossover w/ histogram expansion

• RSI: 59 = confirming strength, but not overbought (>70) levels yet

Implication:

• A breakout above $106.17 with volume confirmation could act as a trigger for shorts to unwind positioning.

XHB Short Interest (shares) 1Y chart

XHB 1Y Chart w/ Fibonacci retracements, MACD and RSI indicators

Source: Bloomberg

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