Short sellers using exchange-traded funds (ETFs) to establish bearish positions or hedge long positions have been aggressively targeting corporate bond funds and international equity funds this year, along with broader market fare such as the SPDR S&P 500 ETF (SPY) and the iShares Russell 2000 ETF (IWM). Recent short sale data from S3 Partners indicate that, while short sellers remain enthusiastic about junk bond and international equity funds, they are also cozying up to mid-cap and technology ETFs.

For the week ended March 23, the iPath S&P 500 VIX ST Futures ETN (VXX) saw the largest increase in short interest among U.S.-listed exchange traded products (ETPs). VXX, which is an exchange-traded note (ETN), saw its short interest jump by $525 million last week, vaulting it into the top 10 among the most shorted U.S.-listed ETPs. With VXX up almost 18% over the past week, it would not be surprising to see some unwinding of short positions in that product. (See also: 3 Charts to Watch as Volatility Rises.)

Getting Testy With Tech

Perhaps it was the rapid erosion in market value at Facebook, Inc. (FB) amid a data-sharing imbroglio or weakness in the broader FAANG group, but the Technology Select Sector SPDR ETF (XLK) saw a significant jump in short interest last week. XLK, the largest technology ETF, saw its short interest rise by $95 million to $1.62 billion, according to S3 data. In dollar terms, only five ETFs saw larger increases in short interest last week.

Still, XLK is not the most heavily shorted sector ETF. That dubious distinction goes to the Utilities Select Sector SPDR ETF (XLU). Even after short interest in the largest utilities ETF declined by $665 million last week, short interest in the benchmark utilities fund remains at $3.18 billion, according to S3. Only five ETFs have larger short interest than XLU. (For more, see: JPM Warns Customers Against Tech Stocks.)

Not-So-Marvelous Mid Caps

The S&P MidCap 400 Index is down 2.4% year to date, a performance that is significantly worse than those posted by the S&P 500 and the Russell 2000 Index. The laggard status of mid-cap stocks is not going unnoticed by short sellers.

The SPDR S&P MidCap 400 ETF (MDY) and the iShares Core S&P Mid-Cap ETF (IJH), both of which track the S&P MidCap 400 Index, were on the list of the 10 ETFs with the largest increases in short interest last week. Short interest in MDY and IJH increased by $86 million and $67 million, respectively, according to S3 data. Financial services and technology stocks combine for almost 36% of the S&P MidCap 400's weight.