The Everyday Short Squeeze

A short squeeze is when too many traders bet a stock will fall, and when it rises instead, they’re forced to buy it back pushing the price sharply higher.

You probably heard of the movie Dumb Money, the story of retail traders banding together to squeeze hedge funds that were heavily short GameStop. The stock didn’t explode because of normal buying pressure; it exploded because the people betting against it were forced to buy it back.

That moment felt historic but here’s the truth most people miss:

This happens all the time.

Not with memes and message boards but quietly, structurally, and repeatedly. Like ocean swells that look calm… until they suddenly crest.

A short squeeze is less about hype and more about pressure. When too many traders lean the same way, the market becomes like a tightly coiled spring. All it needs is a spark, a catalyst and suddenly everyone is scrambling in the opposite direction.

Just the other day, SanDisk jumped 25% in a single day. If you had $10,000 invested, that’s a $2,500 pop in one session. That move wasn’t driven by a wave of new buyers; it was driven by short sellers rushing for the exits at the same time.

And not all squeezes happen in so-called “meme stocks.”

Take Costco, about as buttoned-up as it gets. The stock had been in a downtrend for six months, tapping the same trendline eight times (chart above).  Naturally, traders, hedge funds and retail alike started shorting it. It looked safe. Predictable. Crowded.

Then a simple analyst upgrade hit the newswire.  That was enough.

Price jumped… and kept going. Once the squeeze started, it fed on itself. Shorts had to buy. Momentum traders piled in. The path of least resistance flipped from down to up, like a soccer team that suddenly realizes the entire defense is out of position.

And here’s an important part most people don’t realize:

👉 If you miss day one, it’s often not over. The last time Costco made a similar move, it continued higher by nearly 100% afterward.  Just look at end of May 2023.  Past performance never guarantees future results, but patterns rhyme. Markets have memory, like muscles do.

Just this afternoon, Opendoor Technologies popped onto my radar. Price was sitting right at resistance, shorts were leaning in and then, after the market closed, news broke about potential mortgage-rate relief from the president.

That’s how it happens.  Set Up - Catalyst - Move.

Not randomly. Not magically.  But at the intersection of crowded positioning + technical pressure + a catalyst.

That’s the everyday short squeeze and once you learn what to look for, you start seeing them everywhere.  If you spot one forming, trust your eye. I’m rooting for you.