Is The Short Squeeze Over?

Tyler Durden's picture

Following up on our recent discussion of the worst-is-first rally that we have all been witness to in the last few weeks, we thought it noteworthy that the 'most-shorted' names in the Russell 3000 and the index itself have now recoupled from their epic divergence post-QE3. We have seen five large short squeezes 'engineered' since the lows in March 2009 - and given Citi and BofA's 17% gains in December alone, we suspect (and have heard from more than a few funds) that year-end is bringing some forced buy-ins as SecLend desks become a little more activist.

The 'Squeezes'

 

QE3's Epic Fail (and Win)... as the index and its shorts have now recoupled post QE3

 

And despite the fact that half BofA's market cap is at risk in 60+day delinquent mortgage loans, it has scaled the epic ranks of a 17% gain in December alone... all makes perfect sense...

 

Was John Paulson really Short Financials and Long Gold / Silver - perhaps?

 

Charts: Bloomberg