Back in the summer of 2013 we revealed what the best “alpha-generating” strategy was in a New Normal where hedge fund clustering would ultimately lead to such dramatic hedge fund hotel implosions such as what was seen in the third quarter (described in detail in “What Hedge Fund Panic Looks Like”) and where central banks themselves do their best to crush anyone who dares to short single names courtesy of $13 trillion in excess liquidity.

But while buying the most shorted names (expecting furious central bank and HFT-catalyzed short squeezes) had been a great way to outperform the market in 2012 thru 2014, in 2015 this strategy took a back seat as suddenly the most hated names revealed that there was a reason why they were most hated, and plunged as the Fed’s determination to push stocks higher no matter the cost was put into question.

However, now that the Fed et al have made it beyond clear a downtick is unacceptable even as hedge funds are dramatically underperforming the market and are all – absolutely all of them – rushing to buy the same 5 stocks into year-end due to FOMO, even the tiniest deviation from a priced to perfection market will make the Valeant hedge fund hotel collapse of Q3 seem like a dress rehearsal if F, or A, or N, or G or all of them were to be Philidored.

It would also force a sequential scramble to cover shorts as margin calls are quietly and not so quietly administered on the increasingly underperforming hedge funds (for whom a crowdsourced margin call funding attempt will not be a feasible way out unlike novice E-traders).

What does all this mean?

Well, since central banks have made it abundantly clear they will not allow the S&P to drop even a few modest percent, and since going short the most beloved hedge fund names also carries with it the risk of substantial margin calls (not to mention inlimited downside) the best bearish trade into the year end is, paradoxically, to go long the most shorted names with the expectation that hedge fund blow ups will force domino-like, sequential short squeezes.