Short squeezes are great if you are long and just horrible if you are short. This rally has primarily been put in motion because of a massive short squeeze. Hopefully you don’t think it’s because things just became rosy overnight.
I saw an interesting stat, this morning by The Telegraph this morning, citing that “the most heavily shorted stocks are up 70% : the least shorted stocks are up 21%. Stocks with bad fundamentals in SocGen’s model are up 60%: the best are up 30%.
You might ask why garbage is running and I include the financials in that category? Because bear market rallies are vicious and that is where the longs get the best bang for their buck when the market decides to rally.
It’s so much easier to be a conformist than a cynic but it’s been paying my bills. I’m still playing it as I see it but am cautious and ready to hit the sell button. Stay nimble and don’t buy the hype.