The post-election bull market across US equities has led short sellers trim their positions, according to statistics from IHS Markit.
Demand to borrow shares across US stocks is down by 10% since Donald Trump won the race to the White House in November.
The best performing 10% of US-listed shares have seen shorts retreat by a fifth since election.
US equities have been climbing again this week, sending the Dow Jones and Nasdaq into record territory.
The S&P 500 trading just below its own record levels.
Investors are confident Trump’s pledges of tax cuts, deregulation, and infrastructure spending will be good for American businesses.
“Investors are yet to see the need to crystalize the recent market wins by taking the other side of the rally through bearish short positions,” said analyst Simon Colvin
“Whether this shrinking short interest represents a legitimate shift in sentiment or is simply shorts being forced to close positions in the wake of the massive 53% rally seen in high momentum names remains to be seen.
“But there’s no escaping the fact that several of these names have seen their fortunes change materially over the last three months.
Colvin points to United States Steel, which has short interest has fallen by over two thirds over the last three months after a 60% rally in its share price.
Tech firm Nvidia has been another painful short since the start of November.
Shares have surged by 61% after the firm announced better than expected earnings.
"Short sellers have shown no appetite to short this rally as demand to borrow Nvidia has fallen to a new 18 month low," Colvin added.