Can the politicians threaten the short sellers to stay away for now else they will be put in a corner with rules against shorting?

Below is just my speculation. See if there is any hole in this theory.

Right now the new govt(USA) is doing lots of big changes including weekly tariff dramas. If the market was to go down right now it will be a very bad look. The admin is close with big wall street folks. Simple message to hedge funds is to not short the market until all clear is given.

The govt along with SEC has huge powers to make short sellers life hell, like banning short selling or causing squeeze with positive announcements. Blaming short sellers for economic crisis and congressional hearings can be nightmare too. So, IMO, if the govt tells wall street to not short big time, they will definitely listen.

So, IMO, market going down due to hedge funds shorting bit time is a low probability.

That said, market can go down due to numerous other factors, which are not known at the moment, but this time around hedge funds will not aggravate the situations by piling on and sending stock big time down. Which means we may get 4-5% down and then markets will recover due to dip buying.

That means, we can all relax and ride this train as far as it wants to go. Valuations does not matter if people are buying automatically every month(payroll) and current owners like me are happy with our holding until the story changes.

That said, I will be shocked if markets are 15% higher at the end of the year because I am not expecting EPS to increase that much by then(SPY TTM EPS is still below 2021 peak, but we are 25% higher).