The short positions of hedge funds have dropped to a 16-year low, reflecting the lowest resistance to rising share prices in 16 years. This according to a recent article in Bloomberg.

“Bears pulled out as buying surged among professional investors who were forced back into stocks despite a recession, stagnating profits and the prospect of a messy presidential election,” the article reports, adding that the repurchase of short shares has contributed to the rally.

Goldman Sachs data shows that, at the beginning of August, the median S&P 500 stock had outstanding short interest equal to only 1.8% of market capitalization, the lowest level since at least 2004. “Steamrolled by a rally whose velocity is the strongest in decades,” the article notes, “bears are giving up.”

The article cites comments from TD Ameritrade senior market strategist Shawn Cruz: “It looks like all those fund managers over the past quarter went from being bearish and expecting a stock market crash to now bullish. Sentiments turned positive about equities in general but also sentiment is turning positive for a return to growth.”