Is the Recent Market Run-Up One Big Short Squeeze?

Posted On February 26, 2019 2:53 pm
By: Steve Smith

Since its Dec. 24 low, the market has enjoyed a near-straight line 20% rally. But, it seems to be coming from the bear’s hides rather than bull buying. Some data suggests that the recent run-up is just one big short squeeze.

During the end of year decline, the market had gone from ‘buy the dip’ to ‘sell the rip.’ Since the low, there have barely been any dips to buy, indicating that not only were shorts being forced to cover, but many money managers and hedge funds found themselves woefully underexposed — scrambling to get back, regardless of price.

Of the 34 trading days since the low, there…

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.