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Strategies & Market Trends : The picks
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To: John J H Kim who wrote (5330)2/18/1997 4:35:00 PM
From: Steven Messina,L.M.T.   of 6124
 
John,

A short squeeze occurs when individual's begin to buy back shares of stock they have shorted ( borrowed from their broker and sold with the intent to buy back at a lower price ). You can only short a stock as the price is in an upward momentum.....those are the rules. A short squeeze occurs when all those holding a short position, all begin to cover ( buy back their shares ). It is called a "squeeze" because all those shorters must hurry all at once (squeeze) to buy back their shares inorder to protect profits. This buying back of shares significantly increases trading activity and signals an upward momentum in share price. I hope I explained it in layman's terms so you can understand the principle.

Regards,

Steve
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