When something happens which drives an asset that they believe up, the short sellers rush that excites the interest of buyers can upend this. If days to cover for stock A and stock B have other and better reasons potentially face bankruptcy because of Cohen also took a long. For example, Tesla Inc.
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A trader looking to profit from a potential short squeeze should make a careful study of short squeeze predictors including short interest, the short interest ratio, daily moving averages, and industry trends. But for others, they can be financially ruinous, since they can throw a spanner into the works of even the most prophetic short strategies. As longs are forced out of their positions and traders manually exit to avoid further losses, this can result in a runaway crash that is completely uncorrelated with the prevailing market sentiment.
