Short-covering, risky rally

by Troy

There is a lot of speculative activity in the markets right now. Investors and traders are chasing the riskiest of assets these days, and the general attitude has become “the riskier, the better”. An index of the most shorted & most leveraged stocks has SOARED over the past 30 days, vastly outperforming broader indices such as the S&P 500, NASDAQ, and Russell.

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This index outperformed the S&P 500 by more than 129% over the past 9 months (March 2020 bottom – present). That’s a lot of short covering. The previous record of 83% was on December 3, 2009. To put that into context, U.S. stocks performed poorly in the first half of 2010.

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