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Investing.com -- A significant level of short positions around the current S&P 500 index level creates "a dangerous cocktail for right tail, or squeeze, risk," according to Goldman Sachs’ trading desk.
As of October 22, the median S&P 500 stock had short interest equal to 2.3% of market cap, Goldman’s John Flood wrote in a note to clients, citing data from FINRA. This level ranks in the 67th percentile over the past 30 years.
The current short interest is substantially higher than the 1.5% share that marked the peaks of market squeezes in 2000 and 2021, according to the note.
Last week, hedge funds already covered short positions across macro products, including indexes and ETFs, by the most in four months.
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