ALLW
OptionsWhen it rises too much, it falls; when it falls too much, it rises. The key is how to grasp the inflection point.
With this kind of news coming out, it might really be possible to have a "short squeeze" as mentioned at the end of the article. When short selling reaches a consensus, the market will move in the opposite direction.
The article states:
Industrial, financial, and technology sectors have become the most heavily sold sectors globally.
Energy, healthcare, and consumer staples are the only sectors that have achieved net buying.
Both finance and technology are core industries. I think they should be near the bottom. To harvest profits, capital indeed has a high probability of executing a "short squeeze".
Energy's rise is due to supply-side issues causing a global increase. Consumer staples feel more related to the political economics (demand elasticity) and supply curve studied in high school. Looking at CPI and PCE data, daily necessities are essential. I know a professional Chinese stock trader (who only trades individual A-shares) who also holds consumer stocks because people's demand for necessities doesn't change drastically. So, when the market is bad, A-share consumption sometimes provides support. It seems this phenomenon also applies in international markets.
March Sees Hedge Funds Fiercely Shorting Global Equities
Hedge funds shorted global equities at the fastest pace in a decade in March, with short selling outpacing buys 7.6 to 1.0, marking the fourth consecutive month of selling. 76% of shorting activity was concentrated in index and ETF products, with U.S.-listed ETFs seeing a 17.2% increase in short interest. Industrials, financials, and technology were the sectors with the highest global selling, while energy, healthcare, and consumer staples saw net buying
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