JPMorgan Predicts That The Biggest Short Squeeze Yet Begins Next Month

While markets, regulators and even Maxine Waters have been obsessing over the various rolling short squeezes orchestrated by Reddit and Robinhood raiders (with or without the help of hedge funds who ended up being the biggest beneficiaries of the Gamestop surge) which first targeted the most shorted mid-cap names, before moving to biotechs, pot stocks and eventually pennystocks, the reality is that such squeezes are tiny in the grand scheme of things for two reasons: with stocks trading at record highs, overall short interest across equities is at all time lows…

… so one needs to do highly targeted campaigns looking only for illiquid small and mid-cap names which have a very high short interest to float ratio, and second the real systematic shorts are to be found not in stocks but futures and specifically commodities; after all the original widow-maker trader refers not to Gamestop but to nat gas, where as we showed yesterday moves tend to be fast, furious and especially brutal (just ask Amaranth’s Brian Hunter). In fact, anyone who was short any midcontinent nat gas overnight is now out of business.

Source link