What are Weak Shorts?
Weak shorts are investors who short sell a stock (known as being "short"), but who will buy it back at the first sign of a price increase.
How Do Weak Shorts Work?
Short-term traders typically only enter a short position long enough to capture a quick gain on their investment. Weak shorts don't want to take a loss on their short-term investment, so they will typically set tight stop-loss orders that instruct their brokers to close out their short positions if they lose even a small amount of money.
Why Do Weak Shorts Matter?
Weak shorts piling in and out of a stock can make that stock's price very volatile. Consider: If most of the people selling a stock are weak shorts, when the price increases for any reason at all, the stop-losses that the weak shorts have set will be triggered, causing a rash of buying (i.e. closing out the short positions) and driving the price up very quickly.