Just ahead of the CPI release, Hedge Funds increase S&P 500 net short positions to the highest level in more than a decade.

We might be seeing a “Short Squeeze” on our hands. If the news is somewhat bullish, this may send Bitcoin and the market into a frenzy.

So what is a Short Squeeze?

A Short Squeeze is a phenomenon that can occur in financial markets, particularly in the context of trading stocks or other securities. It happens when a large number of investors have sold a stock short, which means they have borrowed and sold shares of the stock in the expectation that the price will fall, allowing them to buy back the shares later at a lower price and make a profit.

However, if the stock price starts to rise instead, these short-sellers may become anxious and try to buy back the shares they sold in order to limit their losses. This rush to buy can push the stock price even higher, triggering more short-sellers to buy back their shares and causing a feedback loop that can lead to a rapid increase in the stock’s price. This increase can cause significant losses for those who sold the shares short, as they have to buy the shares back at a higher price than they sold them for.

A short squeeze can be exacerbated if there are not enough shares available for purchase to cover all the short positions. This can lead to a situation where short-sellers are competing to buy a limited number of shares, driving up the price even further.

So…

If you were feeling bullish before, this chart might confirm that feeling. However, always act with caution around market-moving news.

Related Articles

Responses

image-popup
image-icon
UPGRADE YOUR SUBSCRIPTION
UNLOCK THIS CONTENT & MORE WITH OUR FREE 7 DAY TRIAL
START MY FREE TRIAL
*Trial requires a credit or debit card and gives you 7 days free access to all features of our platform, then $250.00AUD per month until cancelled. Cancel any time.