A short squeeze is a phenomenon that occurs in the stock market when a stocks price rapidly increases due to an excess of short selling of the stock rather than underlying fundamentals. Short selling involves borrowing a security whose price is expected to fall and selling it on the open market. A short squeeze happens when a security has a significant amount of short sellers, meaning lots of investors are betting on its price falling. The short squeeze begins when the price jumps higher unexpectedly and gains momentum as a significant measure of the short sellers decide to cut losses and exit their positions. This dynamic can result in a cascade of stock purchases and an even bigger jump of the share price. Short squeezes result when short sellers of a stock move to cover their positions, purchasing large volumes of stock relative to the market volume. Purchasing the stock to cover their short positions raises the price of the shorted stock, thus triggering more short sellers to cover their positions by buying the stock; i.e., there is increasing demand. Short squeezes are more likely to occur in stocks with relatively few traded shares and commensurately small market capitalization and float. Squeezes can, however, involve large stocks and billions of dollars. Short squeezes can be identified by monitoring certain indicators that may reveal that a stock is ripe for a short squeeze to occur if substantial buying pressure begins to enter the market. One is the short interest – the percentage of a stock’s total number of shares that are currently held by short sellers.