Mega Squeeze Coming: Last Week Saw Biggest Hedge Fund Shorting Since May

Well, in a week where stocks first spiked then tumbled only to reverse, and where substantial damage was done on HF P&L immediately after a furious burst of shorting -- it is likely that the short squeeze we observed on Friday is about to spread and force even more forced squeezes on Monday, especially now that the $1.9 trillion Biden bill has been passed by the Senate.

The only thing that could prevent a sharp spike in stocks in the overnight/tomorrow session is another burst higher in yields and bond volatility. So keep a close eye on both. However, should there be no fireworks, prepare for a continuation of Friday's meltup as hedge funds - especially Fundamental L/S funds - scramble to close their latest round of shorts and catch up to their sharply outperforming, systematic peers.

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