The Squeeze is On: Hated Stocks are Heating Up

by Greg Guenthner
Daily Reckoning

They just never learn…

Everyone’s backing up the truck to bet big against stocks. Never mind that stocks are a breath from their all-time highs. Forget that speculative and forgotten “risk-on” sectors have pummeled the major averages. Folks are just downright bearish right now.

If the market continues to rally, we could be in for a massive short squeeze in the coming weeks. Once again, Wall Street doesn’t have a clue. If they end up on the wrong side of the boat this time, a short covering rally could be the fuel the stock market needs for a powerful fourth quarter rally.

Earlier this year when the market was trying to get its sea legs back, squeeze trades had become one of the driving forces behind the big move back into the green. Short sellers were taking it on the chin as they pressed their bets.

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