There is not much more rally potential from squeezing the shorts. Bears capitulated as the S&P 500 short interest continues to fall. The Goldman Sachs gauge reveals that short positioning in US blue-chips is the lowest in more than 17 years. Extreme sentiment/postions are associated with subsequently surprising asset returns to the opposite direction of expectations.
Moreover, small caps have been outperforming the tech sector lately. The rotation fetched much attention as market participants unwind the stay-at-home vs. leisure trade.
