Short interest keeps building on Nasdaq's smallest tier while the big-cap tier unwinds

by Wesley Stroud · August 12, 2026

Micro-Cap Markets Correspondent, The MicroCap Herald

Nasdaq published its end-of-month open short interest report for the July 31 settlement date on Wednesday, and the split between its two listing tiers is the part worth reading. Short interest on the Nasdaq Capital Market, the tier where most of the exchange's micro-caps and nano-caps live, stood at 4,446,250,391 shares across 1,653 issues, with days to cover of 1.92. On the Nasdaq Global Market, short interest was 18,151,604,493 shares across 3,835 issues, with days to cover of 3.17.

Both tiers fell versus the July 15 report, but not equally. The Global Market gave up 254.9 million shares of short interest from 18,406,468,581, while the Capital Market shed only 49.6 million from 4,495,814,044. Across all 5,488 Nasdaq issues, total short interest slipped to 22,597,854,884 shares from 22,902,282,625, a decline of 304.4 million shares, meaning roughly five-sixths of the unwind happened on the larger tier.

Widen the window and the direction reverses. Nasdaq's June reports put Capital Market short interest at 4,045,966,221 shares on June 15 and 4,227,522,108 on June 30. From mid-June to the end of July, short positioning on that tier rose about 9.9%, while the Global Market went from 17,903,270,409 shares on June 15 to 18,151,604,493 on July 31, an increase of only about 1.4%. Short sellers spent the summer adding to the small end of the exchange at roughly seven times the pace of the large end.

The issue counts point the same way from a different angle. The Global Market carried 3,764 issues on June 15 and 3,835 on July 31, a net gain of 71. The Capital Market went the other way, from 1,659 issues to 1,653. That is a small absolute change, but it means a growing short base is being spread across a slightly shrinking population of listings rather than diluted across new ones.

Days to cover is the more revealing series. It divides short interest by average daily trading volume, so it rises when short positions grow, when volume falls, or both. On the Capital Market it went from 1.65 at the July 15 settlement to 1.92 at July 31, an increase of about 16% at a time when the tier's short interest actually declined by roughly 1.1%. Arithmetically, that gap can only be explained by average daily volume falling faster than short positions did. The same pattern shows up on the Global Market, where days to cover rose from 3.07 to 3.17 while short interest fell.

Thinning volume matters more in micro-caps than anywhere else, because it is the variable that determines whether a position can be exited at anything close to the last printed price. A tier where the average name would take under two days of normal volume to cover is not heavily shorted by any conventional measure. But the trend in the denominator is the risk: as summer volume drains out of small listings, the same order size moves the price further, in both directions, and the gap between a quoted price and an achievable price widens.

The report also says nothing about why the positions exist. Nasdaq's release defines a short sale simply as the sale of a security the seller does not own, or a sale settled with borrowed stock, and counts shares sold short by all broker-dealers regardless of exchange affiliation. On the smallest tier that total mixes directional bets with hedging against convertible notes, warrants and market-making inventory, and the data does not separate them. Reading a rising number as a rising bet against the tier overstates what is actually disclosed.

Timing is the other caveat. These figures are as of the July 31 settlement date and only reached the market on August 12, so they predate the whole of the current run of data. They do not reflect Wednesday's July CPI print, which the Bureau of Labor Statistics reported at 0.1% month over month and 3.4% year over year, both in line with forecasts and an easing from the 3.5% annual rate recorded in June. Nor do they reflect the Russell 2000 at 3,027.12, up 0.32%, per Yahoo Finance's late-session quote.

The next update, covering the August 14 settlement date, is the one that will show whether short positioning on the small tier was adjusted around the inflation print and the July payrolls data before it. Until then, the July 31 snapshot describes a market where the smallest listed companies carry a slowly growing short base against a slowly shrinking pool of tradeable volume.

For holders of individual micro-caps, the tier-level numbers are context rather than a signal. Short interest concentrated in a handful of heavily borrowed names tells you nothing about a specific listing, and the risks that actually determine outcomes at this size, dilution from at-the-market programs and convertibles, going-concern qualifications, thin float and continued-listing deficiencies, are disclosed company by company in filings, not in an exchange-wide aggregate.