Earlier this month, I endeavored to explain why equities were trading short.

It wasn’t complicated and still isn’t: Positioning among some discretionary cohorts still isn’t extreme. That means some folks continue to under-capture a rally which was on pace Monday to mint a 32nd record high for the S&P 500 in the space of just four months.

Although systematic strategies mechanically added exposure on the way up as realized volatility rolled over, turned down and eventually flat-lined below a 10-handle on every relevant lookback, carbon-based investors were more reluctant given the — how should I put this? — mercurial nature of the man who occupies the highest office on Earth.

The figure on the left, below, shows you Goldman’s house sentiment indicator which rolls up nine measures of positioning across institutional, retail and foreign investors.

Simply put, that metric’s subdued. If anything, it suggests scope for additional equity upside to the extent it accurately captures overall positioning. Note the caveat in the chart header, though: We’re missing a key piece of the puzzle with CFTC data still suspended for the government shutdown.

The figure on the right, above, speaks to the other simple dynamic I mentioned in the article linked here at the outset. Short interest, if not necessarily “high” by historical standards, is elevated for the median stock versus the post-pandemic average. That’s squeeze fodder.

“A basket of the most shorted stocks has doubled since the market low in April and rallied by more than 30% since early September,” Goldman’s David Kostin wrote, in his latest, adding that “while the recent squeeze has been unusually sharp, the still-elevated magnitude of short interest signals more room to run.”

The median S&P 500 stock’s short interest equated to 2.3% of market cap as of the latest FINRA data, Kostin went on, noting that ranks 67%ile percentile on a three-decade lookback and remains “far above the 1.5% share that marked the peaks of the squeezes in 2000 and 2021.”