“Despite a myriad of potential pitfalls facing the market, as we have noted in the past, overly large short selling creates a bid beneath the market. When grateful shorts cover, they prevent any downside momentum from developing.”
I think what also happens is that when the large money managers see the short interest grow, primarily from retail shorts, they throw money in and create a short squeeze. I’ve said this before but it looks like Shamu’s eating baby seals. IMO the market will return to fundamentals but not until these money managers rake as much money out of it as they can. Friday was options expiry and look what happened. Also the market really isn’t that strong when Gold is pushing $700 and the US dollar is at a 15 year low. Something ain’t quite right here.
