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The frenetic action of the small cap equity market like Gamestop GME,
and AMC Entertainment AMC,
drew disbelieving reactions on Wall Street.
But while some may be tempted to dismiss them as a side spectacle, this graph from Societe Generale suggests that the surge in earnings in a handful of heavily shorted stocks is a much larger phenomenon.
Indeed, the top-selling stocks on the $ 3 trillion Russell 2000RUT Index have reaped huge gains since late last year, outperforming the rest of their peers.
The shortest 5% has doubled in value since the end of October, ahead of the next shortest 5%, which in turn has moved ahead of the shorter stocks.
“This upper bracket has now broken away from the next, implying that the level of short-term interest itself is the target of much of this activity,” Research manager Andrew Lapthorne said Wednesday. quantitative data on shares at Société Générale.
See: It’s Not Just GameStop: Here Are Some Of The Other Heavily Shorted Stocks That Are Pulling Higher
Analysts have suggested that retail traders flocking to platforms like Reddit and Discord are actively seeking stocks with a high percentage of short-term interest in an effort to generate short-term squeeze. The hope was that short sellers facing punitive losses would cover their shorts and buy back the stocks, thereby accelerating the gains.
The S&P 500 SPX,
the Dow Jones Industrial Average DJIA,
and Nasdaq Composite COMP,
are on track to lose 2% this week.
Lily: Is trading in GameStop and AMC a major risk? Analysts weigh
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