For some reason, this subject requires some mental gymnastics I've never quite gotten the hang of. If the shorts have been chased away, how can there be longs in the game? I thought every short required a long to make the transaction complete.
“I thought every short required a long to make the transaction complete.”
True. When you buy a share of stock, atleast on the NYSE or AMEX, you are buying from a/the market maker, who shorted (sold) it to you. You cannot conduct a transaction directly with a “short”, eg; a retail someone who is bearish on a stock who goes out and through the action of entering a short-sell order on said stock becomes short the stock. That’s the long-short symmetry. But the difference is that the market maker maintains a hedged position on VAST majority of the shares he owns and will not take much market risk. So, after he sells you your share on which you are now long, he looks at his holdings and decides whether his net long or short position is within his risk tolerance. That is...if he wants to stay in business. He will take very moderate directional risk but prefers to make money on the bid/ask spread thousands or hundreds of thousands or millions of times a day. If your order to buy makes him shorter than he cares to be, he will buy calls and increase his long position, and the same is true in reverse.