Sure. Shorting a market is basically the same as cornering a market just to the downside. Meaning, the bigger your position the more vulnerable you are. As soon as you dump shares on a stock to drive prices down, you create an arb either vs. other instruments or against fundamental value, you basically create cheap entry prices for your competition. The problem is: Even if you're correct you still need to get out of your position, which means you need to buy. If you hammer a stock and you cannot create an avalanche of selling - which in turn is your exit - you're pretty much fcked. Livermore describes this a lot of times in his book. Imagine you throw 10% free float in shorts at a stock just to find out that another big guy is sitting at the bid. He soaks up all your bullets because he either wants to cover his shorts or likes the stock at a discount. You are short big, price did not go down and now you need to cover Short selling stabilizes asset prices, since they're most often the first bids to show up once an asset is in a free fall. They can cover into a down move opposed to catching a falling knife. Always remember: When you're long, you are a seller When you're short, you are a buyer.
As you pointed out, the same logic applies on the buyer side. So if short selling doesn't push markets down, and by the same logic buying doesn't push market up, then we're left with what, the head and shoulders serving a cup of tea chartists? Of course short selling, same as any other selling provides downward pressure on a stock, all things being equal, same as buying provides upward pressure. Certainly when you get into a situation where short sellers make up a significant portion of the float both the carry costs and the potential for a short squeeze can upset this normal function. You definitely need to think about that when you're in the small chunk of the market where this is the case. And if anyone here is buying or selling >10% of the float of a stock I suppose they would need to think about it as well, although there's not a lot of penny stock folks here and those who can swing 10% of the float of a bigger company obviously already know the impacts.