Exactly a week ago, I wondered if there was a Tesla Motors (NASDAQ:TSLA) short squeeze on the horizon. In fact, it was even possible that a short squeeze was already in process considering Tesla's strong post-earnings recovery rally after bottoming out around $140. Short interest had just hit an all-time high of 31.5 million shares, after all. That's why I've been anxiously awaiting the release of official short interest data to see if the rally was indeed driven by short covering.

It wasn't.

Good news for bulls

The Nasdaq has just published the latest short interest figures for the end of February, and surprisingly short interest actually increased, setting a new all-time record of bearish sentiment for the electric-auto maker. We're now talking about a little over 34 million shares being held short, or a whopping third of public float.

Here's the chart that I showed you a week ago comparing short interest with Tesla shares over the past year or so.

Let's update it to include the most recent figures, but also zoom in a little bit to look at the activity since mid-January.

It's also worth pointing out that the Nasdaq reports these figures based on settlement date. So the figures for Feb. 29 correspond to a trade date of Feb. 24 (the good old T+3 rule). Likewise, the Feb. 12 data translates into a trade date of Feb. 9. While short interest increased by 2.5 million shares over that time, shares jumped by 21% to $179.

This was all before Citron Research disclosed its short position on March 1, although Citron's position is likely included in the figures since Citron's modus operandi is to front-run its own short calls, which often move the market in the short term.

The whole situation is notable because it shows that the increase was driven by significant buying pressure from investors going long, not just shorts buying back to cover their positions (either to cash in gains or for fear of additional price increases). That buying pressure was strong enough to overcome the selling pressure of even more shorts piling on trying to push the stock lower. Volume has also been trending higher, so we're talking about a lot of bullish sentiment now gaining momentum.

Even more good news for bullish investors

That means that there's still potentially a short squeeze on the horizon. Shares have continued to move higher, so all of those newly initiated short positions are currently sitting in the red.

Keep in mind that Tesla's Model 3 event is now just weeks away, which is an incredibly important product unveiling for the company, since much of Tesla's future growth is predicated on this vehicle. As Tesla's key to the mainstream, the event could set the tone and in no uncertain terms holding a short position heading into the event is an unqualified bet that the unveiling will disappoint in some way. Either that, or shorts will are playing the whole "buy the rumor, sell the news" trade, which is generally a hit-or-miss strategy (and not based on fundamentals in any way).

In Citron's own words, the "most important" component of its ambiguous short thesis is "balanced" news flow. But it seems far more likely that the news flow around the Model 3 event will be positive. This is an unveiling, not a product launch, so it will probably amplify the existing excitement.

Quite frankly, not even Tesla knows for sure if it will be able to hit its performance or price targets yet. While that's an uncertainty and a risk factor for the 2017 launch, it also dramatically reduces the possibility of Tesla announcing something negative like a price increase at the event. It's hard to imagine what other type of negative news could come from an unveiling.

Brace yourselves, bears. A short squeeze is still coming.