Wall Street is doing something it hasn’t done in nearly 15 years: betting heavily against a market that refuses to stop going up.

Short interest in the median S&P 500 stock has reached 3.0% of market capitalization, the highest level since late 2011, according to Goldman Sachs data. Aggregate short positions across the index surged nearly 10% over the past three months, climbing to roughly 1.4 billion shares. Hedge fund short bets on US equities hit a 10-year high by May 22. All of this while the S&P 500 has been busy notching five consecutive all-time highs in early June.

The wall of worry keeps getting taller

Short interest had already been building momentum before 2026. As of January 2025, S&P 500 short interest stood at a record $820 billion. Since then, the hedging activity has only intensified, even as AI-driven tech gains and broader economic resilience pushed equities to fresh peaks.

The gap between positioning and price action is striking. Normally, record short interest accompanies a market that’s rolling over, not one that’s sprinting to new highs. The current dynamic suggests a market bifurcated between what the price is doing and what a growing cohort of sophisticated investors believe it should be doing.

Short squeeze risk is real, and growing

When short sellers borrow shares and sell them, they’re betting the price will drop so they can buy back cheaper. But if the market keeps climbing, those borrowed shares become increasingly expensive liabilities. Eventually, the losses force short sellers to buy back shares to close their positions, a process called covering. That buying pressure pushes prices even higher, which forces more shorts to cover, which pushes prices higher still.

With 1.4 billion shares sold short across the S&P 500 and hedge fund bearish positioning at a decade high, the kindling for a squeeze is substantial. Any positive catalyst, whether it’s a strong earnings season, a favorable Fed decision, or another AI breakthrough, could ignite covering activity that amplifies whatever gains the catalyst alone would produce.

The last time short interest was this elevated relative to market cap was late 2011, right before the S&P 500 embarked on a multi-year bull run that essentially didn’t stop until COVID.

What this means for investors

When Goldman Sachs tracks short interest climbing to 15-year highs, it reflects the collective judgment of some of the most resourced investors on the planet. Every short position is a future buy order waiting to happen. The more the market rises, the more pressure builds on those positions, creating a mechanical bid under the market that didn’t exist when sentiment was uniformly bullish.

One metric worth watching closely is the pace of short interest change, not just the level. If short positions continue building even as the market advances, squeeze risk compounds. If shorts begin to unwind, it could signal either capitulation by the bears or early positioning ahead of fundamental deterioration.