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The Trade: Riding the massive 'short squeeze'

A trader works on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters

Dovish Fed remarks and a commodity price rebound have sent investors betting against the stock market scrambling in the last week to cover their shorts, boosting share prices in the process. How should investors position their portfolio amid this massive short squeeze?

The S&P 500 is up more than 6 percent from its mid-February low, catching many investors and funds off guard. Commodity prices have risen double digits in a similar time frame, with some heavily shorted commodity-related names such as Freeport-McMoRan and Chesapeake Energy up more than 30 percent during the past week.