Short selling increased again in June as the most-hated rally in recent history continued its march higher. Short selling on the SPDR S&P 500 ETF (SPY) grew by more than 5% as the bears are digging in their heels, which in turn is setting up a few short squeeze opportunities.
Click to Enlarge In our opinion, the increase in short interest is helping to maintain the low-volatility market melt-up as these traders are likely closing out their position on the slightest pullbacks, offering an inventory of buying power. This take goes against our expectations that the market is likely to see a short-term correction soon.
While we still think that it is important to maintain a hedge on one’s portfolio for the likely correction, it is also important to remember to not ignore the bullish trade opportunities at the stock-by-stock level. The market continues to provide ample opportunities for those watching for short squeezes.
Here’s a look at three potential short squeeze candidates: