Short Squeeze Leads to Very Overbought Territory

Zero Hedge reported yesterday about the major short squeeze which is hitting the market now and driving higher the most shorted names. Click here to view the report.

This squeeze hits the hedge funds the most as they usually have more balanced portfolios and they are likely driving up emerging fund ETFs where they’re heavily exposed and have the opportunity to offset their short losses. All in all, combine this with the lessening of tensions in Syria and there exists a runaway, very overbought market.

The market is signaling a higher open again and should this hold, we’ll likely see 2-period RSI readings in SPY above 99; something that is not sustainable. It’s good to see the bull is still on but it’s likely going to pause here within a day or so.

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