Nasdaq Shorts Crushed By Second Biggest Short-Squeeze In History

At the end of September, we observed that the sharp if brief selloff in tech stocks last month has resulted in the second-highest ever pileup of shorts in the Nasdaq, and warned that a short squeeze was imminent:

Amusingly, none other than SoftBank tried to give the squeeze some juice, when it reverted to its notorious massive call spread buying strategy in early October that defined the epic meltup of August when it emerged that Masa Son’s conglomerate had bought tens of billions in call premia in an attempt to ramp up its recently purchased stocks for its tech portfolio.

This trend to force a painful squeeze culminated last Monday, when the Nasdaq exploded higher amid what we called a massive double-squeeze in both dealer gamma (which was short) as well as futures (see “Nasdaq Explodes Higher Amid Unprecedented Gamma/Futures Double-Squeeze“).

And while it is now last week’s news, the latest CFTC Commitment of traders data confirmed what as we warned several weeks ago, would become one of the biggest short squeezes in Nasdaq history. As the chart below shows, after five weeks of aggressive shorting, hedge funds and other non-commercial speculators, pulled back sharply and turn bullish on Nasdaq 100 mini futures.


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