Short sellers haven’t been able to catch a break in this market. While institutions continue to allocate capital to equities (see here), small speculators continue to bet against the market. Over the last few weeks the shorts have dug their heels in. As the market turned lower small speculators have become increasingly net short. According to the CFTC’s Commitment of Traders report small speculators in the S&P 500 have now reached their largest net short position of 2010 and their largest short position since early December of 2009. These traders have been on the wrong side of the trade since the very beginning of the rally and this data could be further contrarian evidence that supports a bullish outlook for the markets.