Crowded shorts

A short is crowded when a large share of a company's stock has already been borrowed and sold by people betting it will fall. You can see the crowd in two places: in the borrow fee, which rises as lenders run out of shares to lend, and in the short interest figures that exchanges publish, the fraction of the shares that are currently sold short.

Crowding cuts both ways, and that is why it sells so well. A crowded short means many informed people expect trouble, which is a real signal. It also means that everyone is standing in the same narrow doorway: if the price rises instead, they all need to buy back at the same time, and the buying feeds on itself. That is the squeeze. The famous charts come from the second case, the pitch comes from the first, and the test has to pay for both.