With the S&P 500 now in positive territory for the year and the mainstream media back in normal cheerleading mode, it is worth noting that 1) "Most shorted" stocks have outperformed the broad market this year, 2) the last 3 weeks have seen the biggest short squeeze in almost 4 years, and 3) Hedge funds are now at a record high 57% net long. We suspect, given the looming Humphrey-Hawkins and March FOMC and the short-term 'gap' between the market and fun-durr-mentals, volatility will be on the rise again.

The "Most Shorted" stocks outperformed the broad market in 2015 so far...

Short positions shed light on the "other side" of fund portfolios
We combined $1.5 trillion of single-stock and ETF long holdings in 13-F filings of 854 hedge funds with our estimate of hedge fund short positions. We estimate hedge funds accounted for 85%, or $627 billion, of the $738 billion in single-stock, ETF and market index short interest positions filed with exchanges as of December 31, 2014.