Why would short sellers be needing to sell positions during a crash? The market has been dropping so a significant number of these short sellers won't have to sell.
Because people emotionally decide that everything is crashing RIGHT NOW and go short to try to make money off of it because IT CAN ONLY GO DOWN.
Does it seem completely inconceivable that the SPX might not reverse and touch $4766 again? Well why don't you take up a leveraged short position which will be highly profitable if the SPX doubles its current fall which you won't be forced to cover unless the SPX bounces back up again. It's free money.
Except double tops in the market happen, precisely because people decide it's all over and at this point in the market take out short bets, and then get burned when it bounces back up and destroys them. As the market in a doomed economy actually goes upwards they all get burned and squeezed which fuels the short squeeze bounce, even though it violates conventional wisdom.
Once you've destroyed all those people who think they've found the gold mine of a safe leveraged bet then the second downwards move can exceed these lows because those people are licking their wounds (but triple-tops happen as well).
To a certain extent the stock market is an optimization engine that ruins literally everyone who thinks they understand the short term direction of the market. If it didn't, you'd be able to make safe money off of it.
The fact that everyone in this thread thinks its all falling, falling, falling means it is probably going to bounce up about now for a bit (of course if that was a 100% safe thing though you could make safe money off of it so nothing is ever entirely certain -- and Russia might launch a nuke at NATO tomorrow).
