Key insights
- The author argues that widespread short positions, fueled by distrust of Trump and expectations of market lows, create conditions ripe for a short squeeze. This contrarian view suggests the market may rally towards all-time highs, defying the bearish consensus. The author points to a similar dynamic in April as precedent, suggesting a potentially rapid and significant upward move.
The index is up 1.5% overnight yet almost no one trusts Trump.
However, this more directly suggests that people as an overwhelming majority in the market are shorting stocks despite pumps up. What they don’t realize is that this wide consensus is exactly the kind of collective shorting that results in short squeezes. If everyone and their mother is so convinced that what Trump says doesn’t matter, and are 100% sure we’ll see way deeper lows, the market won’t give you free candy, regardless of how unreliable Trump is. It’ll do the exact opposite and result in a run back to ATHs
I’d argue this was one of the main reasons we quickly went back up last April and it may now even be a faster more violent run up since literally everyone is now convinced that there will be major new lows. Look at the sentiment around you and use this as an opportunity