The Tuesday brief (and I mean that, literally):

No natural cushion:

A week or so ago, when many of the


(MSTR) - Get Report

of the world were racing skyward in one of those "mothers of short squeezes," I

mentioned that the trouble with short squeezes is that when the shorts are squeezed out, there are no natural buyers to cushion the fall.

A few readers weren't clear on the concept, so I tried to explain how shorting works: that short-sellers borrow shares and sell them and, if all goes their way, the stock falls and they buy the shares at a lower price and return the stock to the owner. That buying by the shorts provides the cushion when the stock heads south.

A squeeze, on the other hand, pulls the shorts out before the fall, as the owners of the stock demand that the borrowed shares be returned, forcing the shorts to buy stock and get out of their positions.

Still don't get it? Take a look at MicroStrategy yesterday, where the short-sellers had been squeezed out by the time yesterday's bombshell was announced: That the company had been booking too much revenue upfront. (You know the shorts were gone -- or mostly gone -- because short interest in early February, just before the stock made its final push upward, had fallen to 1.29 million shares from 3 million a month earlier. Short interest presumably dropped even more as the stock more than doubled since then.)

With no shorts left to buy, or to cushion that fall, the only surprise was that the stock tumbled


62%, as sellers tripped over one another trying to be first out a very narrow door. (Add the heavily margined nature of many of these "yeehaw-squeeeeeeezzzzzeeeee-them-shorts!!!!!!!!!!!" message-board posters, as


has been

pointing out so well, and you get an all-out implosion. "The stocks are down 50% before you can get the first trade off," chortles one short-seller.)

Anecdotal evidence suggests shorts had abandoned such companies as


(RMBS) - Get Report

, which dropped 19% yesterday after an item

here raised some red flags;

Lernout & Hauspie


, the voice-recognition software company known for its

"momentum" press releases, which dropped 12%; and



, a cable-modem maker, which was off 9%.

Funny how fundamentals suddenly matter. Or at least they did yesterday.

Strange times:

In recent weeks, as the squeeze has occurred, my email has slowed to a trickle. It became eerily quiet. Don't know what it tells me other than the few other times the email has stopped, it has turned out to be the calm before the storm. Email indicator works every time. Interestingly, it almost correlates perfectly with

Gary B. Smith's

Smart Guy Alert.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.