Short sellers flocking to U.S. banks risk getting squeezed if investors decide to fight back

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Short sellers flocking to U.S. banks risk getting squeezed if investors decide to fight back
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Short sellers made $7 billion, on paper, from U.S. regional banking, but it could be that bets against the sector are slowing. Read on.

Lawyers at Wachtell, Lipton, Rosen & Katz, for example, urged the Securities and Exchange Commission to impose a 15-day prohibition on short sales to give time for work on restoring confidence. The commission said it wasn’t currently considering a short-selling ban.

Fundstrat technical strategist Mark Newton said regional banks might be making a “short-term bottom” May 5 on signs of seller exhaustion, partially based on DeMark signals, a type of technical indicator that attempts to identify turning points in markets.Chris Murphy, co-head of derivatives strategy at Susquehanna International Group

“While it’s hard to see a catalyst to turn around the regional banks right now, it is a very popular and very crowded short which might be due for a squeeze at some point. Earlier today, we highlighted call spread buying in the SPDR S&P Regional Banking ETF.”Article content“We are arguably reaching a point of hysteria.

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