U.S. equities have pushed to new all-time highs, and seemingly by design, retail traders are leading this expedition into uncharted territory. As both the S&P 500 and the Nasdaq tick higher, individual investors are piling in, picking up call options and targeting heavily shorted stocks with a fervor not seen in years.

• OPEN stock is set for a record monthly jump. See real-time price here.

In the past month alone, retail inflows have surged. Barclays estimates that more than $50 billion has poured into global equities, according to CNN. And unlike the disciplined, earnings-driven approach of institutional players, retail momentum is all about speed, sentiment, and spectacle.

"It seems like the story, at least in the equity market, is everything is kind of risk on," Garrett DeSimone, the head of quantitative research at OptionMetrics, said per Reuters. "It has gotten a bit frothy in that sense."

Shades Of 2021

On Tuesday, Kohl's more than doubled in pre-market before giving up most of those gains, all without any news to justify the move. Its short interest stands at 50%. Sound familiar?

Opendoor jumped over 300% in six days, despite persistent operational challenges. Meanwhile, Beeline Holdings, a nano-cap mortgage fintech, sits atop the short interest leaderboard at 166.77%, followed by Neovolta (81.22%) and Skillz (81.02%).

All are exhibiting signs of the same short-squeeze dynamics that propelled meme stocks to dizzying heights in 2021, and the data support this.

The Goldman Sachs Most Shorted Rolling Index is up more than 60% since April, outpacing the broader market by a wide margin. Social chatter is also surging — Reddit's WallStreetBets is once again abuzz with call-to-arms posts and coordinated buying campaigns.

"They have a huge amount of mentions across retail boards and Reddit," said DeSimone. "They’ve definitely attracted some attention — not based on fundamentals, which I guess defines a meme stock."

Call options now make up 68% of total options volume, the highest since the 2021 meme mania and just shy of their peak. For context, that number dropped to 42% during the 2022 bear market. That kind of speculative fervor is difficult to ignore — and even harder to sustain.

The Institutional Contrarians

The same survey revealed that 36% of investors are underweight U.S. equities, while positioning in the eurozone and emerging markets is at multi-year highs. Meanwhile, a net 31% are underweight the U.S. dollar, the most bearish stance in two decades.

The surface reason is simple enough. The S&P 500 is trading at over 22.5 times its forward earnings, significantly above its historical average of 15.8, while the total market capitalization-to-GDP ratio has exceeded 210%.

These numbers, in combination with geopolitics and President Donald Trump‘s latest tariff and spending plans, along with rising deficits, provide reason enough for institutions to think – is this the best place to park my money?

The professionals aren't chasing this rally — they're watching it warily from the sidelines. And that divergence is becoming harder to ignore.

Read Next:

• Opendoor Investor Who Ignited 500% Rally Gives You His ‘100-Bagger’ Playbook

Photo: Shutterstock