Hedge funds are aggressively increasing bearish exposure, with positioning and sentiment turning decisively negative, per Goldman Sachs prime book.

S3 Partners estimates short interest has surged to 52-week highs, coinciding with the 50 DMA closing right in on a “bearish death cross” below the 200 DMA.

Goldman’s prime brokerage book showed short interest was up +53% last week on the Chinese consumer electronics, software and EV company. The “Apple of China” with an > $100B market cap, is labeled as a “consensus short/sell, at least in the short term due to a lack of catalysts” amid factory delays, safety concerns, and weak EV uptake.

Short interest has risen to 516M shares or 3% float currently, both 52-week highs, as the stock price has fallen nearly 30% from its peak in July. The inverse correlation shows the momentum-driven short additions since the end of September,as hedge funds increase bearish exposure heading into earnings on Nov 18th.

The 50-day moving average, currently at $6.56, has been converging toward the 200-day now at $6.53, placing the stock on a verge of a death cross formation and underscoring the ongoing deterioration in Xiaomi’s structural trend. With the stock closing at $5.53 today (well below both MAs) downside momentum remains intact. The RSI staying near oversold levels and a persistently negative MACD, further validates the sustained bias toward selling pressure.

The rise in short interest from the mid-September trough proved to be a leading signal, foreshadowing the weakness now reinforced by price and negative trends. Any sustained recovery in the stock price should see a visible reduction in short positioning, to confirm the shift in sentiment.

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