Booyah Breakdown: Mad Mysteries

Well, no surprise, it has become the hottest toy this holiday season and you can't find one in a toy store anywhere. So there has been a "squeeze" on TMX Elmo and it's now selling on eBay(EBAY Quote) for $150.

But back in stockland, this so-called squeeze gets worse when an investor has shorted that stock. Remember, the shorts (that's insider language for the people who short stocks) are making a bet the stock price will fall, as we discussed in the question above.

If something starts to push the price up, they'll panic and rush into the market to buy the shares back so they can repay their brokers and cut their losses. This panic buying actually drives the stock price even higher. And that forces more shorts to cover their positions, and so on.

And there you have it -- a "short squeeze."