Short Selling Signals Potential Tech Rally Ahead Elevated short selling and put buying activity in big tech stocks and the S&P 500 are flashing contrarian signals that could precede a significant market rally. When investors heavily short stocks or buy protective puts, it often indicates excessive pessimism, which historically has preceded price recoveries. Recent data shows institutional positioning has become increasingly bearish following the market correction, suggesting potential upside if sentiment shifts. Analysts point out that extreme bearish positioning typically creates a floor for further declines while setting up conditions for sharp rallies as shorts cover positions and put holders exit trades.