when mortgage rates go up, it will be all over. refinancing is their biggest revenue segment. when rates go up, that will be gone. sure, people will keep buying homes but i don't think that will be enough to make up for the shortfall.
my thinking is that with 74% short they control the price action. look at skull candy action. they had a great report and the price jumped just 4% with 70%+ being short. maybe this time it is different but seems with such a high short % that the bears are in control.