Long squeeze

A long squeeze is a situation in which investors who hold long positions feel the need to sell into a falling market to cut their losses. This pressure to sell usually leads to a further decline in market prices. This situation is less common than the opposite "short squeeze", because in a short squeeze, the traders who have taken the short contracts have a legal obligation to settle with the promised shares. A trader who is 'long' in a long squeeze may well have no such obligation, but may sell out of fear. Other investors may see the rapid decline in price as irrational and a buying opportunity (more often than a rapid rise in price seen as a shorting opportunity). However, given recent significant market turmoil, long squeeze has become of more practical interest rather than merely a theoretical possibility. In 2008, Bear Stearns was wiped out after market rumors that the company had cash concerns. Investors started selling the scrip, resulting in a long squeeze, which triggered many other stop order losses and accelerated the decline of the company's stock.

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