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The word can be used in a number of ways. 1) A short squeeze develops when traders with short positions are obliged to cover their positions by buying when the market moves against them. A shortage of supply and abnormally high demand forces the price upward. 2) A long squeeze develops when investors with long positions sell into a falling market to cut their losses which leads to a further decline in prices. Less common than a short squeeze. 3) The word is also used to describe the situation when a commodity is in short supply or 4) a sharp decline in the amount of credit in an economy, either as a result of government measures designed to curb inflation or the result of a general economic recession.