Jim Cramer breaks down how short bets against Lowe's helped power the stock's rally on a second quarter beat and raise.
r, a number of hedge fund managers loaded up on the equity and decided to short Lowe's, he said. A short is when an investor places a bet that a stock price will fall in the near future and tries to turn a profit on the depreciation.
"Traders know that discipline trumps conviction, that's a rule. If a trade goes against you, you have to get out, which in this case means covering your short positions at any price," he said. "Disciplined short-sellers bought back stock to close out their positions and take the loss, and it catapulted the thing into the stratosphere."Traders work on the floor of the New York Stock Exchange on August 14, 2019 in New York City.
"If the president were to simply calm down the rhetoric on China, rather than taking them on like some kind of trash-talking wide receiver, the bears would lose their biggest crutch," said the host, who blamed fears about the bond market on "angry rhetoric and frightening jeremiads from supposed experts" who should listen to conference calls.
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