The biggest risk in the U.S. stock market may not be a sharp decline, but a "short squeeze-style surge" that forces shorts to buy en masse.

This is not something I, Brother Qiang, am saying, but a warning recently issued by Goldman Sachs.

It sounds counterintuitive. The market has been rising for eight consecutive weeks, and many people are starting to fear heights.
But Goldman Sachs believes that the greatest risk right now is actually continued upward movement.

The reason is that currently, the short positions on U.S. macro products have risen to nearly a 10-year high, with many institutions shorting indices and ETFs.
Meanwhile, nearly a quarter of the stocks in the S&P 100 show a clear bullish options skew, with daily open interest in call options reaching as high as $2.6 trillion at one point, indicating extremely active market leverage sentiment.

Simply put, many institutions are worried about economic slowdown, high interest rates, and geopolitical risks, but at the same time, they are afraid of missing out on the rally.
They talk bearish but are actually continuously buying tech stocks.

The problem is that when the market is overly crowded with shorts, even a small positive surprise—such as tech giants exceeding earnings expectations or the Federal Reserve signaling a dovish stance—can trigger a short squeeze.

And short covering essentially means buying.

Short covering drives stock prices higher, which then forces more shorts to buy, creating a positive feedback loop of "rising—covering—rising again," known as a short squeeze.

The wild rise of GameStop and AMC in 2021 is a classic example.
Back then, many shorts were forced to cover, which ultimately caused the stock prices to skyrocket several times or even tenfold in a short period.

Goldman Sachs believes that the U.S. stock market now exhibits similar characteristics, possibly on an even larger scale.
This is because the U.S. has the world's most developed derivatives market, the highest leverage levels, and the most active retail and institutional investors.

Therefore, the most concerning risk in the current market may not be a decline, but rather a scenario where everyone is waiting for a drop, and when an unexpected positive catalyst appears, a collective short covering triggers a short squeeze rally.

If such a situation truly erupts, the first to benefit are likely to be the seven tech giants, followed by those heavily shorted growth stocks and popular concept stocks.