“Most Shorted” Stocks Massive Melt-Up Continues; Bonds, Bitcoin, & Bullion Flat

Another day, another melt-up in the US equity market’s most-shorted stocks back to record highs…

Source: Bloomberg

That is the biggest 3-day short-squeeze since the March/April lows last year.

And the Top 10 “most shorted” Russell 3000 stocks have literally exploded since we noted them on Friday…

Source: Bloomberg

Of course, GME was among the meltiest-uppiest of the melt-ups… after Chamath and the Winklevi tweeted supportive comments for the Reddit/Robinhood crowd’s campaign against the shorts…

The $200 GME Calls came into play today as the gamma-vortex trade continues (65583 Friday calls vs 258 puts)…

Pitney Bowes (with a short interest nest 8 year highs) exploded higher after some comments on Seeking Alpha (also ramped thanks to call-buying debacle)…

“Let’s play a game of Global Thermonuclear meltup…”

Growth extended its rebound off critical supports relative to Value…

Source: Bloomberg

Overall, Nasdaq outperformed as Small Caps suffered (The Dow clung to unch)… (NOTE the late weakness overall as we suspect forces sales/liquidations of longs to fund margin calls on shorts)

Staples Outperformed as Energy stocks tumbled from a ripping-higher open…

Source: Bloomberg

After yesterday’s gains, bonds were largely flat today…

Source: Bloomberg

10Y Yields are holding well below the 1.10% level…

Source: Bloomberg

The Buck pumped’n’dumped on the day…

Source: Bloomberg

And Bitcoin went nowhere…

Source: Bloomberg

Gold also trod water amid the chaos in most-shorted stocks…

Source: Bloomberg

Oil oscillated sideways once again…

Source: Bloomberg

And finally, the gamma-vortex in the most-shorted stocks (virtuous circle of call-buying / hedging flows) has sent the put-call ratio crashing near record lows…

Source: Bloomberg

U.S. stocks are moving ever less in tandem, to a degree that has preceded equity market selloffs in recent years. As Bloomberg reports, the S&P 500 Index’s three-month realized correlation — a gauge of how closely the top stocks in the benchmark move relative to each other — has fallen to 0.16.

A maximum possible correlation of 1 would signify all the shares are moving in lockstep. Behind much of the decline is a combination of the reflation trade stock rotation and equity moves due to earnings season. But low correlations are also seen as a sign of weakening market breadth and have occurred before recent stock market corrections, including “Volmageddon” in early 2018.