Skip to content
Subscriber Only

Short-Covering Frenzy More Concentrated Than Stock Moves Suggest

  • There’s been modest short-covering in least-loved small caps
  • JPMorgan strategist says short squeeze affects narrow universe
GameStop Pares Rally To Double Digits As Retail Traders Pile In
Photographer: Tiffany Hagler-Geard/Bloomberg

The bout of short-covering that roiled global markets last week looks highly concentrated in just a handful of small-cap stocks rather than a more extensive phenomenon.

The absence of a more widespread trend is even evident within the 25 members of the Russell 2000 Index that are most bet against. The average level of short interest in these shares fell just three percentage points to 38% on Thursday, from 41% at the beginning of the year, according to data compiled by Bloomberg. The level of bearish bets -- which is calculated as a percentage of free float -- is still higher than the 34% it was a year ago.