Wednesday’s Whoopee Cushion bounce trapped buyers when the short squeeze apexed around mid-session. The subsequent dive has continued into early evening and portends some tough days ahead for bulls. I’ve provided some precise downside targets in my latest update for the E-Mini S&Ps, but suffice it to say that if the lower of them is achieved, the Dow would be down another thousand points. Short covering is by far the most powerful source of buying right now, and at times the only source, but with so much uncertainty about the potential economic impact of the coronavirus, bears can afford to hang back and let stocks fall. They will continue to be squeezed from time to time, but expect them to be more discerning in the days ahead about when to hit the panic button.
Shorts Have Mounting Uncertainty on Their Side
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