Short covering is driving price action in markets today

I hate to break up the party from this nice bounce in equities but when you drill into what's driving it, there's a problem.The biggest gainers today are many of the worst performers this year. That suggests today's move is more driven by short covering than by a rethink on AI or even the reversal in yields.One of the biggest gainers today is Nike, which is up 6.5% while Lululemon is up 6.3%. Both have been among the worst performers this year. Intuit and Expedia are also big gainers.There are some indications that the break lower in yields is part of the equation with housing-related names like Pool Corp up 8% and Zillow up 10.2%. The home builders XHB ETF is also up 2.9%. You could extend that to the whole move but I'd be reluctant to do that. Adding to that sentiment is the ongoing dive in yields, which might suggest that money is being parked in Treasuries instead. At times, you see counter-trend moves like this when funds take down exposure and their shorts are more-thinly traded.There are rumors that the VARA AI fund has blow up and that could be creating a broader de-risking move. Now some have indicated the fund run by Ben Hoskin and David Field has $40 billion AUM, so it could be material. We could also be seeing the post-Leopold playbook unfold. After it was revealed that the heavy selling in AI names was due to Situational Awareness blowing up, then longs piled back in. News like that highlights that the coast is clear on forced selling.In any case, I'm having a tough time tying everything back to fundamentals. The inflation data was hot again today and oil is up another 3%, so the bid in bonds is counter-intuitive. The resilience in stocks based on short-covering also plausible but I'm also trying to factor in a potential fund blow up, which can distort everything.  This article was written by Adam Button at investinglive.com.