The S&P 500 is up 0.44% in the last three days, a solid return for the buy-and-hold'ers thinking about long-term appreciation. However, under the covers of that move is, just as we predicted, [4] a massive and accelerating short-squeeze is underway, dragging the "Most Shorted" stocks up 4.65% since Friday's open as investors bet increasingly on central-bank-inspired expectations that hedge fund blow ups will force domino-like, sequential short squeezes.
Now that is some serious outperformance...
[5]
This is the biggest 4-day squeeze since the start of October and post-Black Friday crash bounce.
Just as we predicted [4]...
...since central banks have made it abundantly clear they will not allow the S&P to drop even a few modest percent, and since going short the most beloved hedge fund names also carries with it the risk of substantial margin calls (not to mention inlimited downside) the best bearish trade into the year end is, paradoxically, to go long the most shorted names with the expectation that hedge fund blow ups will force domino-like, sequential short squeezes.
So which are the stocks that have the highest hedge fund short interest as a % of market cap? For the answer we go to the latest hedge fund tracker by Goldman.
The answer: first, here are the stocks with a sub $1 billion market cap:
[6]
And next, the large, $1+ billion companies:
[7]
All made possible thanks to the Fed totally breaking the market's discounting function.
