/biz/ - Business & Finance

>https://www.bloomberg.com/news/articles/2020-08-21/bears-are-going-extinct-in-stock-market-s-13-trillion-rebound

BLOOMBERG: Bears Are Going Extinct in Stock Market’s $13 Trillion Rebound
By Lu Wang
August 21, 2020, 1:12 PM PDT

>Short sales drop to a 16-year low as covering help fuel gains

>One source of equity demand is depleted with S&P 500 at record

Skeptics are a dying breed in American equities. It’s another illustration of how risky it has become to doubt the resilience of the market’s $13 trillion surge since late March.

Going by the short positions of hedge funds, resistance to rising prices is the lowest in 16 years. Bears pulled out as buying surged among professional investors who were forced back into stocks despite a recession, stagnating profits and the prospect of a messy presidential election.

While perhaps logical given open-ended Federal Reserve support, rampant covering depletes at least one source of support for shares -- buying by speculators who sold them short. Virtually every constituency in the market has gotten more bullish as the S&P 500 surged 52% in five months. In the past 21 sessions, there hasn’t been a drop of 1%, the longest stretch since January.

“The repurchase of those short shares has been a factor which has contributed to the rally that we’ve enjoyed,” said Lawrence Creatura, a portfolio manager at PRSPCTV Capital LLC. “It will certainly be a weaker force going forward, because mathematically it’s just simply a smaller quantity of outstanding shares that are still short.”

The S&P 500 added 0.7% over five days, notching its fourth straight weekly gain. It exceeded the Feb. 19 record high on Tuesday to cap the fastest bear-market recovery in history. The Russell 2000 Index of smaller companies fell 1.6% while the Dow Jones Industrial Average was virtually flat. The Nasdaq 100 performed better, climbing 3.5%.