Short Squeeze Hits Escape Velocity

Tyler Durden's picture

The 'most shorted' names in the Russell 3000 are up a remarkable 1.4% today compared to 0.45% in the index itself. The short-squeeze off the NFP gap-down lows is impressive indeed. From the open last Friday, the 'most short' names are up 6.6% against the index up only 3.5% as the dash for trash continues in the face of increasingly dismal data. The last 2 times that the 'most short' index was this squeezed relative to the index was late-December (before the equity dip) and mid-Fed (before the equity dip). Just as we warned here and here, the inexorable flow of easy money means the dash-for-trash (as remarkably ridiculous as it seems - though as now know nothing is allowed to fail ever again) has been the winning trade; though as we note below, there is a limit to the 'squeezability' and we appear to be there in the short term.

 

The 'most short' names have been smashed higher in the last few days with Tuesday and today being more epic squeezes...

 

and the last two times the squeeze got this wide...

 

But it is remarkable that this rally has provided a 30% rally off the November lows among the most-shorted names - almost double the performance of the index itself...

Finally, for those who missed it the first time around in February (since when the basket has returned well over 10%), here again are the most shorted Russell 2000 stocks: