FX Evolution: The Last 3 Times This Happened We Saw a 30% Move…
When an asset class gets heavily oversold, it can become susceptible to a short squeeze. That’s when those who sold the asset short start to get burned by rising prices. They have to buy to close their position.
But there may not be enough supply available without moving the price far higher. Investors on the right side of a short squeeze can make a big profit in a short period of time.
While investors may be familiar with the squeeze concept from meme stocks like AMC Entertainment (AMC) or GameStop (GME), it can occur in bigger stocks and even entire asset classes as well.
Currently, bond yields have soared as prices have dropped. Bonds have gotten heavily oversold. And gold prices saw a big jump higher at the end of last week, after getting heavily oversold.
And after September’s slump, stocks saw a big reversal higher that could continue into the end of the year.
Gold could be the most susceptible to a further squeeze, with the potential for a 30 percent rally. That’s because institutional investors were net short gold going into its first squeeze higher.
Either way, assets are on track for strong year-end performance. Investors can buy stocks at a discount, bonds at their highest yields in decades, and also see a potential jump in gold to new all-time highs.