005 Monthly Short Squeeze Report

EB Short Squeeze Report - May 2023

Tom Bowley — Tue, 02 May 2023 12:39:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, has just been updated and is available on our website. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

Short squeezes require PANIC on the part of short sellers. They need to be losing money on their trades with the potential of unlimited losses FORCING them to buy the stock and cover their short positions. A short-term move higher without volume is not a squeeze. If volume is below average, there can't be panic. As I look at our most recent Short Squeeze ChartList (SSCL), I see only a few stocks that would mildly interest me. Here they are:

MSTR:

This one checks all the boxes, but I still don't see "panic" in the recent performance. If it continues pushing higher, perhaps that'll appear in rapidly accelerating price action. Something to keep an eye on.

IBRX:

Price improvement and higher daily volumes are quite apparent, but IBRX is in a weakening biotech area. Daily volumes are mostly above average, but I believe a true "panicked" bunch of short sellers could push volume to 20 million or even much higher.

ZYXI:

Volume certainly exploded as ZYXI cleared the top of gap resistance on Monday. That probably did put pressure on many shorts to cover, but today's volume is likely to be much lower, barring an afternoon explosion.

TGTX:

This is easily the healthiest chart of the four. I like the consistently-rising AD line, strong relative strength, and exceptionally-high volume on upside moves. There are a large number of unhappy folks shorting TGTX right now. And they may grow more desperate in the days and weeks ahead as strength forces more shorts to cover.

A Look Ahead At May

As I mentioned earlier, I just updated the latest Short Squeeze ChartList (SSCL) based on the latest short figures and this updated ChartLists is now available for viewing/downloading. I looked at every SSCL stock on this updated list and most are mired in lengthy and deep downtrends. Many are going down for very good reason. I would have ZERO interest in being long until we see a move up to clear overhead price and moving average resistance on extremely heavy volume. The jury is still out on whether the stock market is heading higher from here. I believe it will, but we do still need to negotiate the August 2022 high. These short squeeze stocks tend to see many more buyers during a risk-on market advance like one that could develop on the aforementioned breakout. PLEASE understand that these short squeeze stocks are INCREDIBLY RISKY and VOLATILE, because of the huge supply and demand imbalances that they experience.

Just remember that the higher the short % of float, the more potential demand on a true short squeeze. And if there's true PANIC, then we should see volume move exponentially above average. If I see individual stocks of interest from this list throughout May, then I'll likely post it in the Daily Market Report.

Happy trading!

Tom

EB Monthly Short Report - February 2023

Tom Bowley — Fri, 03 Feb 2023 11:18:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, has just been updated and should be available on our website later today. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

At the time of our last Monthly Short Report, I was expecting that we could soon see the stock market in "risk on" mode, which no doubt would benefit stocks on our SSCL. Well, as we've seen money rotate much more aggressively over the past month, our Short Squeeze stocks have absolutely exploded. Check out the 1-month returns below:

Trading stocks on this ChartList ANY TIME requires significant risk taking. But one of the biggest mistakes with trading or accumulating shares of stocks on this ChartList is doing so while anticipating a rally. That can be particularly dangerous. I normally do not buy SSCL stocks on weakness or before breakouts occur. These technical developments, or lack thereof, do NOT trigger short squeezes. Shorts need to be losing money before they'll panic and cover. So I look for breakouts and a significant increase in volume. Please understand the risks you're taking before entering any potential short squeeze trading candidates.

December-January Report Card

I published a Short Report for December and simply pointed out three stocks to watch if breakouts occurred and volume increased. Here they were, with key annotated levels to watch:

Discussion: I had pointed out that W was starting to rise in late November, but it wasn't until January that we finally saw a closing breakout above the 43.00-43.50 level. Once that happened, however, WOW! It's been a fun short squeeze ride, except for those shorting, of course.

Results: This trade never executed in December, but the wild squeeze in January shows how patience pays off when these stocks finally get their time in the sun.

Grade: A+

IBRX:

Discussion: I wanted to see a breakout here above 6.50 with a big increase in volume. I also pointed out that IBRX was one of the few SSCL stocks, at the time, that had a fairly bullish PPO.

Results: IBRX finally did make the breakout above 6.50 with increasing volume (well above average), but failed rather quickly at extending those initial gains, making it difficult to make money.

Grade: D

AMC:

Discussion: AMC was attempting a breakout at the time of publishing the last Monthly Short Report. I indicated that the intraday breakout needed to confirm end of day. It never did.

Results: The failed breakout proved to be the defining moment on the AMC chart as it fell rapidly following the false breakout. Ensuring the closing breakout turned out to be a very good decision. Sometimes a "no trade" is the best trade.

Grade: A

A Look Ahead At February

I just updated the latest Short Squeeze ChartList (SSCL) this morning based on the latest short figures. I looked at every SSCL stock on this updated list. Most have improved considerably given the more bullish stock market action of late. These short squeeze stocks tend to see many more buyers during a risk-on market advance. Their continuing strength will likely be very reliant on the overall market behavior. Many stocks have already broken out and chasing short squeeze stocks can be extremely painful when the surge ends. Like with musical chairs, we don't want to be the person without a seat when the music stops. PLEASE understand that these stocks are INCREDIBLY RISKY and VOLATILE, because of the huge supply and demand imbalances.

Just remember that the higher the short % of float, the more potential demand on a true short squeeze. And if there's true PANIC, then we should see volume move exponentially above average. Given all of this, here are 3 stocks that still have my interest as of this morning:

CVNA:

Despite the huge surge in CVNA shares over the past few weeks, CVNA's short % of float has actually increased from 58.01% to 59.65%, which I find amazing. Apparently, there are some professional shorts digging their heels in, while many retail shorts panic and exit. I have no idea who wins this battle ultimately, but I know if CVNA breaks to new highs, we could see an absolute avalanche of buyers. The question for each of us is......is it worth the risk. If CVNA fails, it could quickly return to single digits. My suggestion would simply be to keep position sizes fairly small. Don't allow short squeeze failures to ruin your portfolio.

BYND:

This one doesn't seem to be giving up, breaking out again yesterday on a closing basis. I first mentioned this one as volume began soaring during our LIVE trading session last Friday. After a quick trip back to test its rising 20-day EMA, BYND has surged again. Volume has slowed a bit today, so a sudden surge in price AND volume could be your clue for the next squeeze and upside move.

PXMD:

At the time of the last Short Squeeze ChartList, PXMD was the most-heavily shorted stock, with 63% of its float short. It dropped to 38.93% in the latest SSCL, showing that many shorts have covered on recent strength. But at 38.93%, there are still plenty more likely to exit soon if price surges again. Today, volume has really spiked and PXMD opened above key price resistance at 3.69. Another end-of-day run back above 3.50, but especially the 3.69 open, could trigger a slew of covers into the close.

There are plenty of others on the SSCL to watch and, if they make key breakouts with accelerating volume, could absolutely be the next big short squeeze stock. I review this list every morning around 10am, looking specifically at the first 30 minutes of volume. If the volume is there, then I watch for potential breakouts.

Happy trading!

Tom

EB Monthly Short Report - December 2022

Tom Bowley — Thu, 01 Dec 2022 11:58:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, will be updated on our website later today or tomorrow. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

Generally, I would not trade a stock on this ChartList unless (1) price momentum is bullish (PPO should be > 1), (2) we're setting a new high for at least the last month, but preferably the past 2-3 months, or longer, (3) relative strength vs. peers is improving, (4) volume is WAY above its normal 50-day SMA, and (5) a final wish would be to have a strong industry group support the stock. There hasn't been a whole lot of this in 2022, because investors have been in a risk-off mode. August was promising as the rally off the mid-June low accelerated. That's a much better environment for stocks to potentially begin to "squeeze" those shorting. However, September happened. The Fed-related selling killed uptrends that had begun over the previous several weeks and most of the stocks on our Short Squeeze ChartList no longer qualify based on the criteria identified above.

I'm expecting that we could soon see the stock market in "risk on" mode, which no doubt would benefit stocks on our SSCL. Trading stocks on this ChartList ANY TIME requires significant risk taking. But one of the biggest mistakes with trading or accumulating shares of stocks on this ChartList is doing so while anticipating a rally. That can be particularly dangerous. I normally do not buy SSCL stocks on weakness or before breakouts occur. These technical developments, or lack thereof, do NOT trigger short squeezes. Shorts need to be losing money before they'll panic and cover. So I look for breakouts and a significant increase in volume. Please understand the risks you're taking before entering any potential short squeeze trading candidates.

November Report Card

I published a Short Report for November and pointed out a couple stocks to watch if breakouts occurred and volume increased. Here they were, with key levels to watch annotated:

UPST:

Discussion: UPST is one of the most-heavily shorted stocks right now and its pace of decline appears to have slowed. Note that its PPO is just a bit below the centerline, so it wouldn't take much strength for it to cross into positive territory, one key development that I look for in a short squeeze stock. I also like the fact that consumer finance ($DJUSSF) has been strengthening on an absolute and relative basis. Money could find its way into UPST and with a short percentage of float reaching 38%, this one could definitely launch. Watch for an increase in volume and a breakout above 26.00.

Results: UPST never cleared the overhead price resistance and fell nearly 40% over the next week to ten days, which is a perfect example of why it makes sense to WAIT for a breakout rather than to ANTICIPATE one. Sometimes, no trade is the best trade.

Grade: A

MSTR:

Discussion: This one follows the path of bitcoin ($BTCUSD). I actually like the bitcoin chart right now and believe that a risk-on environment would ignite this crypto. If bitcoin rises into year end, look for MSTR shorts to run for cover. MSTR is already showing some strength on its chart, trading above its 20-day EMA, which has crossed above its 50-day SMA. Also, note that the PPO is nicely above its centerline, highlighting bullish momentum. On the last quick pop higher in price a week ago, volume increased above its average line, but wasn't enough to trigger a squeeze. The next pop and volume increase could be a different story.

Results: I discussed the improvement that was taking place in MSTR last month and the fact that I thought we might see bitcoin rally into year end. Of course, the FTX fiasco took care of the latter. But once again, WAITING for strength is generally the way to go with potential short squeeze stocks. MSTR never saw the required breakout with big volume and dropped 45% (!!!) from October 31st through November 21st.

Grade: A

A Look Ahead At December

I looked at every SSCL stock as of this morning. Most have improved technically as yesterday was definitely a "risk-on" kinda day, which helped these potentially-volatile stocks. Here are a few that might be worth watching for possible breakouts as volume is already on the increase:

Yes, I see that volume from yesterday and the solid gain. But the biggest resistance level on the chart is at 43.56. On November 14th and 15th, W cleared this level barely on an intraday basis, but failed to close above it. A close above 43.56 with a short float here of 31.66% and we could see an explosion. Again, jumping in ahead of time, anticipating a breakout could prove profitable. However, just keep in mind that MANY, if not MOST, short squeeze stocks fail to make those breakouts and simply roll over and result in trading losses. I prefer to SEE the breakout, and try to catch the short squeeze "wave" to a quick 10% or 20% profit. I do like the improving relative strength of home improvement. That would only favor W if it could make that breakout.

IBRX:

I've featured IBRX before - just before the big explosion back in September. And IBRX is one of the few, if not only, SSCL stock with a very strong AD line. It also boasts a strong industry group - biotech ($DJUSBT). Volume accelerated yesterday above its 50-day SMA, another positive. But the short squeeze rally isn't likely to trigger until we push above 6.50 with gusto. I'd continue with patience here.

AMC:

This one has "potential short squeeze" written all over it. Volume is already 50 million shares today and it could be a bottoming head & shoulders breakout. This is the type of stock that could jump 50% in the matter of a couple days if shorts begin to panic. Today's close will be important. I like a breakout here, while a false breakout would be more concerning.

Happy trading!

Tom

EB Monthly Short Report - November 2022

Tom Bowley — Tue, 01 Nov 2022 11:32:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, was updated on our website today. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

I'm seeing a lot of positive market rotation, especially on an intraday basis. That leads me to believe that we could soon see the stock market in "risk on" mode, which no doubt would benefit stocks on our SSCL. Trading stocks on this ChartList ANY TIME requires significant risk taking. But to do it now, anticipating a rally, can be particularly dangerous. Please understand the risks you're taking before entering any potential short squeeze trading candidates.

I didn't publish a Short Report for October as I didn't see significant opportunities. If you recall, the S&P 500 ended September at 3585.62, a closing low in 2022 at that time. I do believe, after a few months of trending lower and bullish market rotation, that we could see a much more bullish stock market into year end. For that reason, I'd be interested in considering a few candidates - though I ALWAYS keep my positions in these stocks small in order to avoid HUGE losses. Many of these companies are being shorted for good reason. I do not view ANY of these stocks as long-term core positions. I'm simply trying to use the demand vs. supply advantage to score quick profits.

September Report Card

Two months, I provided 2 potential setups off our Short Squeeze ChartList (SSCL), so I thought I'd evaluate the actual September performance vs. the potential I discussed at that time:

SWTX:

I highlighted key price resistance near 31.00 on SWTX and indicated that we needed to see a move above 31.00 on increasing volume to potentially see a short squeeze develop. Here's what happened:

Result: SWTX did make a confirming-volume breakout shortly after publishing the September Short Report, but it was short-lived and would have resulted in a losing trade as the breakout didn't stick. Obviously, this is a risk of trading short squeeze stocks. You can see that holding these types of failed breakouts can be painful. SWTX is now down 20% from where a potential buy would have occurred in September.

Grade: C-

IBRX:

Now THIS is the type of short squeeze potential that we try to tap into. I highlighted the 4.75-5.00 price resistance zone as the level to watch. And when this one broke above it, it exploded!

Check out that massive surge in volume that accompanied this breakout. THAT is what panicked short covering looks like. After breaking above 5.00 on September 12th, IBRX reached an intraday high of 7.80 on September 15th, just 3 days later. That's a potential 56% return in 3 days! I didn't trade IBRX, but I can assure you I would've sold long before it hit 7.80. I would have either had a profit level set, say at 10% or 20%, and I'd have been gone. Sometimes, when a stock catches fire, I'll put in a trailing stop. So, if IBRX reached 5.50, I might set a .50 trailing stop to guarantee that I don't lose money and still provide the stock ample opportunity to trade much higher.

Grade: A+

A Look At September

Let me be clear AGAIN. I am NOT a fan of holding short squeeze stocks long-term. I wait until I believe they have a chance to EXPLODE, and then I take SMALL positions. Some of you may want to swing for the fences and that's fine. It's your money and deciding how much risk you're willing to take is your decision 100%. Just keep in mind that these stocks are generally shorted for very good reason and many times drift lower and lower over time. Developing and maintaining the Short Squeeze ChartList (SSCL) is just one part of our research and our goal is to simply provide you the knowledge to make better investing/trading decisions.

As I mentioned in Monday's Daily Market Report (DMR), I took a small position in a handful of SSCL stocks. I normally don't anticipate moves in these stocks, but I have turned very bullish AND my positions are small. I'm willing to risk small losses for a potentially big move to the upside.

Currently, the Short Squeeze ChartList (SSCL) is full of stocks that aren't performing very well. As I moved through the list of SSCL stocks, here are two that caught my attention, in addition to the 5 I mentioned in yesterday's DMR (NKLA, BLNK, WKHS, W, BYND):

UPST:

UPST is one of the most-heavily shorted stocks right now and its pace of decline appears to have slowed. Note that its PPO is just a bit below the centerline, so it wouldn't take much strength for it to cross into positive territory, one key development that I look for in a short squeeze stock. I also like the fact that consumer finance ($DJUSSF) has been strengthening on an absolute and relative basis. Money could find its way into UPST and with a short percentage of float reaching 38%, this one could definitely launch. Watch for an increase in volume and a breakout above 26.00.

MSTR:

This one follows the path of bitcoin ($BTCUSD). I actually like the bitcoin chart right now and believe that a risk-on environment would ignite this crypto. If bitcoin rises into year end, look for MSTR shorts to run for cover. MSTR is already showing some strength on its chart, trading above its 20-day EMA, which has crossed above its 50-day SMA. Also, note that the PPO is nicely above its centerline, highlighting bullish momentum. On the last quick pop higher in price a week ago, volume increased above its average line, but wasn't enough to trigger a squeeze. The next pop and volume increase could be a different story.

Happy trading!

Tom

EB Monthly Short Report - August 2022

Tom Bowley — Tue, 02 Aug 2022 12:39:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, was just updated again earlier today. It'll likely be updated on our website by early tomorrow morning. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

I would not trade a stock on this ChartList unless (1) price momentum is bullish (PPO should be > 1), (2) we're setting a new high for at least the last month, but preferably the past 2-3 months, or longer, (3) relative strength vs. peers is improving, (4) volume is WAY above its normal 50-day SMA, and (5) a final wish would be to have a strong industry group support the stock. There hasn't been a whole lot of this in 2022, because investors have been in a risk-off mode. However, I believe the tide is turning and we'll see much more "risk on" trading in the second half of the year.

July Report Card

Last month, I provided 4 potential setups off our Short Squeeze ChartList (SSCL), so I thought I'd evaluate the actual July performance vs. the potential I discussed one month ago:

ICPT:

I wasn't overly positive on ICPT's short squeeze prospects, but I did provide a short-term target of 15.50. ICPT was trading at 14.13 at the time of the July Short Report. Two days after providing the July report, ICPT hit 16.02 intraday, though it never closed above the 15.50 resistance level discussed in the month of July. It provided almost exactly the amount of upside as projected.

Grade: A+

SWTX:

SWTX was trading at 26.52 at the time of last month's report. I pointed out overhead gap resistance and the declining 50-day SMA, suggesting that SWTX could make a run for 31-32. On July 20th, SWTX hit an intraday high of 32.48, but it never closed above 30.87, before rolling back over. This one was nailed.

Grade: A++

DNMR:

I pointed out that 6.50 was ultimate short-term price resistance. DNMR traded mostly range-bound in July with closes ranging from 4.33 to 5.37. The intraday high was 5.45. While it never reached the 6.50 level that I had mentioned, DNMR did provide solid profit opportunities on a few occasions.

Grade: B

OMER:

When I pointed out OMER, it had just risen nearly 70% IN ONE DAY! So the volatility was on the verge of getting out of control. I pointed out that I still saw key price resistance in the 5.00-5.60 range. If OMER could break through that range of resistance, then many shorts were likely going to be forced out of their position. Well, OMER consolidated much of July, before resuming its upward trajectory late in the month. It did move up to 5.27 on July 29th before pulling back. The possible short squeeze is still lingering.

Grade: A-

A Look At August

Let me be clear. I am NOT a fan of holding short squeeze stocks long-term. I wait until I believe they have a chance to EXPLODE, and then I take SMALL positions. Some of you may want to swing for the fences and that's fine. It's your money and deciding how much risk you're willing to take is your decision 100%. Just keep in mind that these stocks are generally shorted for very good reason and many times drift lower and lower over time. Developing and maintaining the Short Squeeze ChartList (SSCL) is just one part of our research and our goal is to simply provide you the knowledge to make better investing/trading decisions.

Having said all of this, I have taken small positions in several of our SSCL stocks. Why? Because the entire list is beginning to show strength, so a possible squeeze could be in the very early stages.

Here are five stocks from this list that are all showing signs of increasing volume and are threatening key short-term price breakouts. Reversing candles will likely take me out of these positions. One thing to keep in mind with respect to SSCL stocks: The odds of them working are relatively low, but when they do, the returns can be very substantial. Because the odds are low, however, that's why I choose to take smaller positions. If you take big positions, you can be forced to accept very large losses and I really want to avoid that. Back to those 5 positions:

BLNK:

Volume has been heavier of late and money is rotating into specialized consumer services ($DJUSCS). Could we see quick squeeze to 30 bucks? Maybe....

WKHS:

Is today a breakout? Well, we won't know until the close. But note that money is now rotating INTO autos ($DJUSAU). That can't hurt stocks in this space, even those heavily shorted.

NKLA:

This is another from the auto space. In addition, that PPO is showing accelerating bullish momentum and volume has been mostly above its 50-day average the past few days.

SKLZ:

This one is probably the biggest stretch, because volume doesn't yet confirm much of anything. But I like the way this chart is shaping up. Rising neckline (solid black line). Rising shoulders (dotted black line). Watch the volume and also the upcoming $2 price resistance. If resistance is cleared and volume moves above that moving average, odds of a squeeze would increase significantly.

SPCE:

SPCE is in the strengthening aerospace group ($DJUSAS). Boeing (BA) has been on fire, climbing 50% the past seven weeks or so. That could bolster a stock like SPCE. Can we make this breakout today on the close? If so, volume is likely to be above average and the highest we've seen July 7-8.

Obviously, the overall market will have some impact on the performance of these 5 stocks and our entire Short Squeeze ChartList (SSCL). But the entire ChartList seems to be gaining strength, so taking a chance with small positions probably isn't the worst thing.

Happy trading!

Tom

EB Monthly Short Report - July 2022

Tom Bowley — Mon, 04 Jul 2022 20:07:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, was just updated earlier today. It'll likely be updated on our website by early tomorrow morning. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

I would not trade a stock on this ChartList unless (1) price momentum is bullish (PPO should be > 1), (2) we're setting a new high for at least the last month, but preferably the past 2-3 months, or longer, (3), relative strength vs. peers is improving, (4) volume is WAY above its normal 50-day SMA, and (5) a final wish would be to have a strong industry group support the stock. There hasn't been a whole lot of this in 2022, because investors have been in a risk-off mode. However, I believe the tide is turning and we'll see much more "risk on" trading in the second half of the year.

The "Short" List

I haven't been writing a Short Report in recent months as the stock market environment, quite honestly, hasn't favored stocks that are heavily shorted. I do plan to write one each month moving forward and the monthly Short Report will simply feature anywhere from one to five stocks off of the Short Squeeze ChartList (SSCL) that I believe could become short squeeze candidates based on their current charts. Obviously, there could be more as the month moves along, but I'll give you a few stock ideas to at least keep on your radar. Just remember it's not a short squeeze if volume isn't well above average and the stock isn't moving to new recent highs.

Intercept Pharmaceuticals, Inc. (ICPT):

ICPT is part of an improving biotech industry ($DJUSBT). While the stock price has been climbing, there's little evidence that it's a short squeeze as volume remains well beneath its 50-day moving average:

I wouldn't rule out an advance to perhaps 15.50, but I also wouldn't treat this as a "squeeze".

SpringWorks Therapeutics, Inc. (SWTX):

SWTX has seen some buying in recent weeks after a huge gap lower on massive volume. Gap resistance and the declining 50-day SMA should represent formidable resistance in the 31-32 area:

I'd expect this one to roll back over fairly soon and possibly work its way back to the recent low.

Danimer Scientific, Inc. (DNMR):

The breakout on this one above 4.75-4.80 was interesting as volume did accelerate and clear its 50-day moving average of volume for several days in a row. The pullback last week was on much lighter volume and price action reversed at the 20-day EMA (blue circle):

The AD line here is strengthening and software has shown signs of life off the May relative low. Ultimately, I think 6.50 is the critical price resistance, but even a move up to test that level would be roughly a 35% rise.

Omeros Corp (OMER):

Friday literally had shorts running for the exits. Anyone who shorted OMER during the past 2 1/2 months is now underwater and has to be thinking about cutting their losses. I see overhead price resistance from 5.00-5.60, so clearing that level could really make things interesting here - especially with the recent surge in volume.

That's it for July. I can tell you this. I am NOT a fan of holding short squeeze stocks long-term. They are generally shorted for very good reason and many times drift lower and lower over time. What we try to do is make our members aware of the POTENTIAL of short squeezes by maintaining our Short Squeeze ChartList (SSCL) and then by periodically reporting on this ChartList - either via the monthly Short Report or in our Daily Market Report (DMR).

Happy trading!

Tom

EB Monthly Short Report - April 2022

Tom Bowley — Sun, 03 Apr 2022 11:50:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, was just updated over the weekend. You should be able to find it on our website today. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

The ChartList should be updated on our site today. In the event it's not updated when you check, you can use the link and password below to view/download:

April Short Squeeze ChartList (SSCL)

Password: SSCL4317

I would not trade a stock on this ChartList unless (1) price momentum is bullish (PPO should be > 1), (2) we're setting a new high for at least the last month, but preferably the past 2-3 months, or longer, (3), relative strength vs. peers is improving, (4) volume is WAY above its normal 50-day SMA, and (5) a final wish would be to have a strong industry group support the stock. There hasn't been a whole lot of this in 2022, because investors have been in a risk-off mode.

The "Short" List

From this point forward, the monthly Short Report will simply feature anywhere from one to five stocks off of the Short Squeeze ChartList (SSCL) that I believe could become short squeeze candidates based on their current charts. Obviously, there could be more as the month moves along, but I'll give you a few stock ideas to at least keep on your radar.

GOGO, Inc. (GOGO)

First, GOGO has a short % of float of 39.18%. That's a hefty number and could certainly result in a short squeeze. It's likely contributed to GOGO's solid run since reporting better-than-expected earnings last month. I could see the strength really accelerating if GOGO can push back through its overhead price resistance. I like that the AD line has been improving steadily as well. That suggests that buying GOGO into morning weakness could prove to be quite profitable as well. Here's the current technical outlook:

If GOGO can trade above 20 and the volume accelerates, a short squeeze could very well be underway as every short will be underwater at that point.

Beyond Meat, Inc. (BYND):

BYND is also very-heavily shorted with a short % of float that exceeds 40%. That simply guarantees us a LARGE number of panicked buyers if a serious uptrend gets underway. There are a couple of interesting points I'd like to make about BYND. First, its PPO is nearly back to its centerline. It has not seen its PPO go positive in the past 6 months. It also has not seen a single close above its 50-day SMA over the same period. Doing both of those things would be noticed by traders, and certainly by short sellers, who at this point are accustomed to BYND downtrending with little buying interest. A second point to make here is that BYND's AD line recently hit a 4-month high. That's a signal that the stock is finally trading better in the afternoons - not something that downtrending stocks tend to do. Another very important consideration here is that money has been rotating towards defensive sectors like consumer staples, which is where BYND belongs - the Dow Jones U.S. Food Products Index ($DJUSFP) to be exact. The DJUSFP just broke out to another fresh high, so if BYND can get jumpstarted, a short squeeze could follow:

Keep in mind there's nothing to do here just yet. Sit on your hands. I think it's a big mistake to try to anticipate a short squeeze. It would similar to a surfer getting up on his/her board before a wave hits. We want to see that "big wave of buyers" hitting and THEN stand up on the board (buy).

SmileDirectClub, Inc. (SDC):

Here's another heavily-shorted stock as SDC boasts a short % of float of nearly 31%. Like BYND, there's no reason to jump in just yet, but there is some potential bullishness building beneath the surface. We just need it to bubble over into a short squeeze. First, check out SDC's PPO, which has now been above the zero line for the past few weeks. I circled four candlesticks below, showing how SDC finished those days at the highs. You can see the strengthening of the AD line as a result. We saw SDC's volume pick up on March 18th, clearing its 50-day SMA of volume for the only time in the past two months. I see MAJOR overhead price resistance in the 3.00-3.15 range. Should we break above that level with increasing volume, a short squeeze could be underway:

In the bottom panel, you can see that medical equipment ($DJUSAM) is showing more relative strength of late. If this continues, the odds grow that SDC can trigger a short squeeze. On the flip side, however, watch the triple bottom in relative strength. If that fails to hold, it would make it much more difficult for SDC to see a breakout, much less a short squeeze.

That's it for this month. I can tell you this, however. I am NOT a fan of holding short squeeze stocks long-term. They are generally shorted for very good reason. What we try to do is make our members aware of the POTENTIAL of short squeezes by maintaining our Short Squeeze ChartList (SSCL) and then by periodically reporting on this ChartList - either via the monthly Short Report or in our Daily Market Report (DMR).

Happy trading!

Tom

EB Monthly Short Report - February 2022

Tom Bowley — Mon, 31 Jan 2022 11:52:00 +0000

Short Squeeze ChartList

I skipped the EB Monthly Short Report for January 2021 primarily for one reason. Sellers have been in control of these short squeeze stocks for the past few months. There have been few "worthy" breakouts and, without breakouts, you cannot have a short squeeze. I would not trade a stock on this ChartList unless (1) price momentum is bullish (PPO should be > 1), (2) we're setting a new high for at least the last month, but preferably the past 2-3 months, or longer, (3), relative strength is improving, and (4) volume is WAY above its normal 50-day SMA. There just haven't been any of those and still aren't.

Hot Stocks

I try to narrow down the list of potential trades on the SSCL by looking only at stocks with solid relative strength (SCTR > 70) and some bullish momentum (PPO > 1). For December 2021, I ran a scan against the SSCL looking for daily PPOs > 1 and SCTR scores > 70 and it yielded just 2 stocks. Here they were at that time:

Neither of these stocks have seen any extended strength, providing no opportunity for a short squeeze. I reviewed every chart on our November 30 Short Squeeze ChartList and found 1 stock that had a temporary short squeeze in play - and your timing needed to be perfect to capture it:

By the time BBIG saw its PPO turn positive, the short squeeze was all but over. Keep in mind that short squeeze stocks will be EXTREMELY volatile - usually in both directions. You truly need a gambling mindset to effectively trade short squeeze stocks, because you must have a very high risk tolerance.

The primary ingredients for a short squeeze on BBIG was there, however. In addition to breaking above recent price highs (broke to a 6-week price high in mid-January), volume must soar. Clearly, volume soared. But you don't want to be the last person standing when the music stops. Check out the 12.50 high on BBIG back in September. Whoever bought at that high would have been holding a 60% loss one month later. I've had many questions like "how high can a short squeeze stock go?" There is no set rule. I'd simply say that the higher the short percentage of float, the more POTENTIAL for exploding price. I also would not want to buy a short squeeze candidate and then not look for a few days. I believe these are meant to be very-actively traded. If I buy, I almost always will set limit orders to sell, stair-stepping my exit on any strength. Then just be prepared for EXTREME action, maybe higher or maybe lower.

I would avoid buying Short Squeeze stocks based on normal technical evidence and behavior. Oversold can remain oversold for a very long time. Positive divergences are routinely ignored. Pullbacks to test moving averages may not represent solid reward-to-risk entry points. For me, it's a "buy high and sell higher" strategy. Any profit is a great profit. These are very fast movers, so it's easy to buy or sell at the wrong time. Don't beat yourself up over it, just understand the volatility that accompanies these stocks.

I believe the best way to trade Short Squeeze stocks is to combine both current momentum (rising PPO) and relative strength (SCTR > 70, at a minimum). Of course, we want to watch the volume as well. In recent Short Squeeze ChartLists, I've added a 50-day SMA line to the volume so that you can visualize quickly whether volume is heavy or not each day.

So let's run that "SCTR > 70, PPO > 1" scan against our new Short Squeeze ChartList, which was just updated over the weekend. Want to know how many of the 33 stocks on this ChartList met this simple filter? Zero. This is one possible scan to run every day to look for renewed strength, but for now, I'd avoid trading short squeeze candidates.

Short Squeeze Trade Candidate

As I look at our current Short Squeeze ChartList, I wanted to feature a stock that could become a short squeeze candidate:

BBBY:

This rally attempt could fizzle as fast as it started. However, volume will be well above average volume today and if BBBY can close above 16, we know anyone shorting the past several weeks will be underwater. It's not the ideal short squeeze candidate, but it's probably as good as any on our SSCL right now.

I'll give you one other possible trade candidate on our list having a good day today and with volume already more than its 50-day SMA. Is it just getting started? It's possible, but just keep in mind that this is an EXTREMELY risky trade - not for everyone.

SKLZ:

Happy trading!

Tom

EB Monthly Short Report - December 2021

Tom Bowley — Tue, 30 Nov 2021 21:24:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, was just updated tonight. You should be able to find it on our website on Wednesday. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

Hot Stocks

I try to narrow down the list of potential trades on the SSCL by looking only at stocks with solid relative strength (SCTR > 70) and some bullish momentum (PPO > 1). Last month, I ran a scan against the SSCL looking for daily PPOs > 1 and SCTR scores > 70 and it yielded 15 stocks. Here they were at that time:

This represented the largest number of Short Squeeze stocks with positive momentum since January. Surprisingly, it didn't matter. After a bit of strength in early November, every one of these stocks finished the month well off their intra-month highs.

The top November performers from the October 31st Short Squeeze ChartList were as follows:

After these four stocks, the next best November performer was GEO Group (GEO), which gained just 2.69% for the month. Only 6 stocks on this ChartList had PPOs over 1 when we ended the month (down from 15 at the beginning of the month).

So let's run that "SCTR > 70, PPO > 1" scan against our new Short Squeeze ChartList, which was just updated tonight. Here are the only 2 stocks returned from that scan:

While anything can happen, short squeezes usually don't appear out of thin air. We need to see a period of rising prices that potentially subjects short sellers to big losses. It's that fear that triggers the panic buying to create a short squeeze. Of these two stocks, BLNK looks the most capable of making a run:

BLNK:

It certainly seems as though BLNK already saw a short squeeze. Rising from 28 to 49, or 75% higher, in just three weeks - and on massive volume - looks like panic buying to me. Could we see another huge move higher? Sure, but I'd view BLNK as having a very wide trading range. While a trip back to 47 is possible, and maybe we'll even see a breakout to carry the stock higher, a trip down to its 50-day SMA or below is just as likely.

Short Squeeze Trade Candidate

Each month, I feature one stock from our Short Squeeze ChartList that I believe could potentially become a short squeeze stock. Last month, I featured Beyond Meat (BYND), which had a short % of float of 27.65% at the time. Here's a look at the chart a month ago and what I had to say at that time:

BYND:

"Make no mistake, buying at this point is a definite stretch, especially after the latest rally. BYND is a downtrending stock, but there are subtle signs that things could be changing. First, its peer group has started trending higher and its relative strength vs. its peers just printed a double bottom and we've seen recent relative strength. Also, it's unusual to see a heavily-shorted stock's AD line nearing multi-month highs in the midst of a lengthy downtrend. We still need a price breakout, however, to begin to force short sellers to think about covering. I don't think that happens until 110. That would put BYND at roughly a 7-week high, putting recent short sellers at much greater risk. That could, in turn, lead to more buying pressure. But as I said, we need to more technical strength to put pressure on those short sellers."

BYND was a perfect example of why you don't buy a potential short squeeze stock and HOPE it goes higher. It can get quite expensive. Take a look at what happened to BYND after it failed to clear 110 price resistance:

BYND is now at 70 bucks, a far cry from 110. Many stocks are shorted for good reason. A short squeeze only takes place if a stock can break out. Clearly, BYND never did that and remains in lengthy downtrend. The shorts are winning on this one right now.

As I look at our current Short Squeeze ChartList, I wanted to feature a stock not mentioned above. Here's one that I believe, with a bit more buying pressure, could become a short squeeze stock later this month:

ICPT:

After a few really bad months for biotechs ($DJUSBT), we finally saw the group turn higher vs. the S&P 500 the past two weeks. If that continues, that might help to launch ICPT, which has shown better volume trends of late and is currently residing near key price support. If that breaks, I'd be extremely careful as the overall downtrend could accelerate. However, if that support holds and ICPT clears 20-day EMA resistance, the potential for an advance increases. I doubt that shorts would grow overly concerned unless major price resistance at 20 is pierced.

There don't appear to be many stocks on our Short Squeeze ChartList scaring the short sellers at this moment in time.

Happy trading!

Tom

EB Monthly Short Report - November 2021

Tom Bowley — Thu, 04 Nov 2021 10:04:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, can be found on our website and it was updated at the end of October. Under "Stocks", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an "Extra" or "Pro" member at StockCharts.com.

Hot Stocks

Let's review both stocks. DVAX quickly fell to 15.86 on October 1st, but then rebounded nearly all month long, closing the month at 19.97, slightly above where it closed September. Outside of that first trading day, however, the bulls were mostly in control here. GOGO had soared to close September. After a quick spike to open October, it fell more than 20% over the next 3 days to approach its 20-day EMA. From there, like DVAX, GOGO built upward momentum the balance of October, but still closed lower for the month. The potential short squeeze for both these stocks remain perfectly in play for November.

The top October performers from the September 30th Short Squeeze ChartList included the following stocks:

BLNK
ICPT
OCGN
SKLZ
GEO

So let's run that "SCTR > 70, PPO > 1" scan against our new Short Squeeze ChartList (as of November 3rd close). Here are the stocks returned from that scan:

Every one of these stocks are capable of short squeezes, but may or may not actually achieve it. If they do, prices will SOAR. Trying to decide which stocks to consider for a short squeeze varies by individual. I tend to gravitate to stocks that belong to sectors or industries that are really strong. So, for instance, I might be more interested in consumer discretionary stocks, simply because I know money is rotating heavily towards that sector right now. BGFV is in that sector and also happens to have the highest short % of float at just over 43%. That's a big number and could trigger quite a squeeze. Watch the volume closely as it quickly expanded yesterday and is gapping higher this morning:

BGFV:

It appears a short squeeze may already be underway given the massive volume yesterday. But keep in mind this stock has 43% of its float short. That's a really, REALLY big number. It could potentially drive BGFV much, much higher. Also keep in mind the volatility on stocks like this are UNCONTROLLABLE. The volatility is CRAZY at times. We'll see huge swings back and forth so please make sure you're comfortable with this type of SIGNIFICANT risk.

Just PLEASE remember that trading short squeeze stocks is VERY RISKY. It's not for everyone. We could see an explosion higher, but there's a very significant chance the entire rally fizzles. You MUST be prepared for potentially significant losses. I'd consider short squeeze stocks much like being at a casino. You might hit it big or you might lose much of what you've got. You need that kind of mindset to trade these stocks. To keep risks low, trade small position sizes.

Short Squeeze Trade Candidate

Each month, I feature one stock from our Short Squeeze ChartList that I believe could potentially become a short squeeze stock. Last month, I featured Big 5 Sporting Goods (BGFV), which had a short % of float of 41.05% at the time. Here's what I had to say last month:

"As I look to October for a possible short squeeze candidate, there's only one other stock on our SSCL besides DVAX and GOGO to have a PPO > 0 and a SCTR above 50 and that's BGFV. I don't currently see a great trading opportunity here, but I'd watch for one of two levels in deciding whether to trade it."

Here was what BGFV looked like last month:

I further stated that "one piece of positive technical news here is that BGFV's peer group, specialty retailers ($DJUSRS), has been in favor off of its June relative low. That means the group is attracting more than its fair share of new money, which could help BGFV in its effort to trigger a short squeeze."

BGFV mostly traded sideways throughout October, but came to life in late-October and early-November as you can see below. I featured BGFV earlier in this report, but it didn't include today's action. Things have changed quite a bit, so here's an update:

4 million shares have already traded in the first hour today. A strong finish this afternoon would put incredible pressure on shorts as they'd all be underwater with losses mounting.

As I look at our list, I wanted to feature a stock not mentioned in the 15 with PPOs > 1 and SCTRs > 70. Here's one that I believe, with a bit more buying pressure, could become a short squeeze stock later this month:

BYND:

Make no mistake, buying at this point is a definite stretch, especially after the latest rally. BYND is a downtrending stock, but there are subtle signs that things could be changing. First, its peer group has started trending higher and its relative strength vs. its peers just printed a double bottom and we've seen recent relative strength. Also, it's unusual to see a heavily-shorted stock's AD line nearing multi-month highs in the midst of a lengthy downtrend. We still a price breakout, however, to begin to force short sellers to think about covering. I don't think happens until 110. That would put BYND at roughly a 7-week high, putting recent short sellers at much greater risk. That could, in turn, lead to more buying pressure. But as I said, we need to more technical strength to put pressure on those short sellers.

Happy trading!

Tom

EB Monthly Short Report - September 2021

Tom Bowley — Tue, 31 Aug 2021 20:41:00 +0000

Short Squeeze ChartList

Our Short Squeeze ChartList (SSCL), consisting of the most heavily-shorted stocks, can be found on our website and it was just updated today. Under "Members", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an Extra or Pro member at StockCharts.com.

Hot Stocks

It was a successful month, overall, for these 3 stocks. CRTX hit an August high of 121.98 on August 10th, climbing more than 100% in the first 10 days of the month. MRIN didn't perform very well, falling during the first 3 weeks of August, before recovering some of those losses into month end. SPRT was unbelievably strong, a poster child for a short squeeze. I pointed out that SPRT could see a lot of short covering if it could clear 9.50. Here was the chart I provided last month:

Check out SPRT's MASSIVE gains in August:

Do you see the massive volume that accompanied the breakout? THAT is what a short squeeze looks like. It's completely irrational, because those who are covering (buying) are not rational buyers. They are buying out of complete panic.

The Top 5 Short Squeeze performers for August were as follows:

Those top two were two of the three I mentioned last month. I think your best chance of catching a short squeeze play is to look at stocks showing relative strength and at least some bullish momentum.

So let's run that "SCTR > 70, PPO > 1" scan against our new Short Squeeze ChartList. Here are the stocks returned from that scan:

All four certainly appear capable of short squeeze runs, though BGFV and MSTR have recently shown big moves on heavy volume. Here are their charts:

BGFV:

Given the short squeeze potential here, it would be easy to see BGFV move up to at least test the early-June high.

MSTR:

I would have thought that early-August breakout on increasing volume would have sent the stock soaring, but it didn't. That could give short sellers a sense of security, meaning that we might not see enough volume on a breakout to trigger a short squeeze. If MSTR does break out, just watch volume very closely.

Short Squeeze Trade Candidate

Heading into August, I featured RIOT, suggesting it could be a solid short squeeze candidate on a high-volume advance past key price resistance near 40. Here was the chart provided last month:

RIOT did make a jump higher as it traded as high as 40.80 in August, certainly a nice gain for the month. However, RIOT was never able to clear that 40 level on a closing basis, so short-squeeze volume never materialized. Here's what RIOT looked like as we ended August:

40 remains critical resistance if you continue to follow RIOT for a possible short squeeze.

As I look at the current Short Squeeze ChartList, one stock that I believe to be worth watching is GDRX:

I see a lot of improvement on this chart and the AD line really jumps out at me. It's very unusual to see stocks on our Short Squeeze ChartList (SSCL) with strong AD lines. It goes completely against the whole idea of short selling. When there's a high short interest, it means that there's EXTRA selling taking place, or more distribution. So a strong AD line, suggesting accumulation, is counter intuitive, in my opinion. Volume trends recently have turned more bullish and I really like the action here since the downtrend line was broken a few weeks ago. I see an upcoming trip to that 40-41 area and if GDRX can somehow clear that area, it would be trading at a 6-month high, forcing those who have shorted in 2021 to re-evaluate their short positions. That could lead to......a potential short squeeze.

Happy trading!

Tom

EB Monthly Short Report - August 2021

Tom Bowley — Sun, 01 Aug 2021 12:17:00 +0000

Short Squeeze ChartList

The Short Squeeze ChartList (SSCL) can be found on our website and it was just updated this weekend. Under "Members", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an Extra or Pro member at StockCharts.com.

Hot Stocks

It was not a great month for our Short Squeeze ChartList (SSCL) stocks. The 7 mentioned last month that had both relative strength and momentum had poor results overall, with CVNA being the only exception. Here's how the 7 performed during July:

CVNA was in a position to benefit from a double-top breakout. Here was the chart that I provided last month, followed by the current chart:

June 30, 2021:

July 31, 2021:

I see potential problems here. First, there's a negative divergence in play. Ordinarily, I'd ignore technical warning signs like this on a high volume short squeeze possibility. But check out that volume. It's not exactly like shorts are running for cover. If anything, I'd be concerned of the lack of a short squeeze.

Massive short covering of heavily-shorted stocks simply wasn't a thing in July. Whether it becomes a thing in August remains to be seen, but I wanted to provide you with an updated list of current SSCL stocks that meet our SCTR > 70 and PPO > 1 filter. Here they are for August:

Both CRTX and SPRT report their quarterly results this week, so there's at least a possible catalyst to get things jumpstarted. MRIN ran from its 1.71 close on June 23rd to an intraday high of 27.26 just two weeks later on July 6th. It was a favorite trade among the Reddit group, which led to the amazing rise. MRIN reported results on Friday after the close, but it appeared to trade lower in Friday's after hours. Revenue decreased quarter over quarter and its EPS improved by one penny, from a .22 loss to a .21 loss. I didn't see estimates for either revenues or EPS, so I'm not sure what Wall Street was expecting.

I'd consider all three of these stocks to be extraordinarily risky, but with significant potential returns as well. SPRT could see a lot of short covering if it can take out its key intraday price resistance as reflected below:

Theme

Historically, technology (XLK) tends to perform well during August. Since the secular bull market began in April 2013, the XLK has not seen a down July and its tendency has been to extend those gains as we move into August. July and August have been the best two months in terms of the number of years during this secular bull market that the XLK has outperformed. Here's the 8-year seasonal chart for the XLK vs. the S&P 500:

Given the promising seasonal period for technology, it probably makes sense to consider SSCL stocks that belong to the technology sector.

Short Squeeze Trade Candidate

Heading into July, I featured KDMN, suggesting it could be a solid short squeeze candidate on a high-volume advance past key price resistance near 4.20. Here was the chart provided last month:

Well, KDMN experienced a weak first half of July, but then exploded higher on July 16th, reaching an intraday high of 4.87. It certainly provided a very short-lived opportunity at profit as it fell back last week:

This chart really exemplifies the extremely volatile nature of short squeeze candidates. It's why I believe we should keep position sizes small, if we even trade them at all. A large position can get very emotional with the wild swings associated with these types of stocks.

As I look toward short squeeze possibilities in August, while also keeping that technology theme in mind, I'm drawn to watch RIOT. RIOT has a very strong positive correlation with bitcoin ($BTCUSD) and the latter has begun strengthening again. If RIOT can move back through 40, I believe many shorts would be forced to cover, which could send the stock rocketing higher. Here's the current view:

Happy trading!

Tom

EB Monthly Short Report - July 2021

Tom Bowley — Sun, 04 Jul 2021 10:15:00 +0000

Short Squeeze ChartList

Hot Stocks

If you've followed these stocks over the past month, then you now know how volatile and risky these stocks can be. We've seen HUGE winners, but also HUGE losers. Virgin Galactic (SPCE) was 31.23 a month ago. On June 28th, SPCE topped at 57.51, more than 80% higher. On the flip side, however, was Cel-Sci (CVM), which on Monday had gained roughly 25% for the month of June - until this happened:

These stocks provide excellent trading opportunities, but the risk is very high as well. There are reasons why stocks are heavily bet against. Sometimes those placing those big bets are right. Other times, they're not. One thing is certain. They typically result in wild rides in both directions, which means that keeping your emotions in check can be extremely difficult.

I believe this momentum plus relative strength scan is a great place to start, though. So I've run this scan against our updated SSCL. Here were the results this month:

SPCE has been on a roll obviously, but in order to keep the momentum going, it will need to break out above the February 11th closing high of 59.41. Meanwhile, gap support is 40.26 and the rising 20-day EMA is at 40.58, so there's your key support area.

SENS is interesting as it sold off last week to close just six pennies above its 20-day EMA at 3.45. It reversed off the 20-day EMA in June, so this would be a logical area to see another reversal. CRTX likely benefited from the surge in biotechs recently and could benefit from further gains in July. Biotechs love the month of July historically.

MSTR is beginning to trend higher again. I'd keep an eye on recent highs and lows to make sure this pattern continues. A close above 700 could result in many more buyers and a possible test of April price resistance just beneath 900. Shorts could really begin to panic on CVNA on a close above 320. Volume will be key for sure. A high volume breakout would encourage more shorts to cover to manage risk. Here's the chart and the significance of that breakout:

PRTS and FUBO are both trending above their respective 20-day EMAs, but still have a long ways to go to reach 52-week highs. FUBO's volume has been heavier so I like that one better among these last two.

Theme

Last month I highlighted the health care (XLV) theme and the fact that health care has a strong tendency to outperform in June. Over the past month, the XLV gained more than 6%, trailing only the technology sector (XLK), and easily outperforming the benchmark S&P 500. Biotechs ($DJUSBT) were strong last month, and that definitely aided many of our Short Squeeze stocks. That same historical strength carries over to biotechs in July as you can see below:

If you look at the bottom of that July bar, you'll see that the DJUSBT outperforms the benchmark S&P 500 by an average of 3.4% during July. That's a lot of outperformance. 10 of our 40 SSCL stocks are biotechs. It's worth keeping this in mind.

Short Squeeze Trade Candidate

As I look at the 40 charts and search for stocks to watch closely, two things are paramount. It's the combination of high short interest and some catalyst, fundamental or technical, to trigger high volume to accompany a price rise. Last month, I highlighted Blink Charging (BLNK) as a short squeeze stock to watch. It was 34.00 to close out May, but I pointed out that it needed to see its PPO rise above zero and it needed to break its downtrend. It did both to open June and later printed a high of 44.49 on June 28th before selling kicked in last week. This trade worked out well.

As I look at our updated SSCL, which stock on our current list has the potential to become a short squeeze candidate?

I'll take a shot with Kadmon Holdings (KDMN). Its short interest rose during June from 23.95% to 25.49%. It was 21.25% back at the end of March. As I look at the chart, I believe it's held up fairly well the past few months, despite rising short interest levels. That also means that there are a lot of shorts on board in its recent trading range. Should KDMN be able to break out above recent price resistance, there's a very good chance that shorts would need to cover, driving the price up much faster and on heavier volume. It's at least one that I'd keep on my radar. Here's the current chart:

That 4.20-4.25 resistance area will be critical. Biotechs love the month of July, but KDMN has not fared so well during July. Just please keep in mind that short squeeze trade candidates tend to carry very high risk. Consider either avoiding them altogether or keeping your position sizes very reasonable.

Happy trading!

Tom

EB May Short Report - Tuesday, May 11, 2021

Tom Bowley — Tue, 11 May 2021 12:07:00 +0000

Short Squeeze ChartList

The Short Squeeze ChartList (SSCL) can be found on our website and it was just updated this morning. Under "Members", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an Extra or Pro member at StockCharts.com.

Hot Stocks

It's been awhile since our last Short Report. The primary reason is that there really haven't been a lot of exciting breakouts and bullish momentum among stocks on the list. There still aren't, but because it's been a few months, I thought I'd update the report. In our last report on January 31st, we featured 11 stocks that were showing bullish momentum and characteristics that could lead to short squeezes. If you recall, we ignored stocks that made HUGE advances in January as we felt the risk was too high based on the massive gains that many heavily-shorted stocks had made. In hindsight, that turned out to be a very wise move. Here's an update of the 11 stocks that we last featured and how they performed, including their subsequent price highs and their current prices:

While many of these stocks performed well in the weeks after our latest Short Report was issued, current prices show a very mixed story. I would consider Short Squeeze stocks to be a very short-term in nature. For the most part, we're trying to benefit from short-term market inefficiencies. A high short percentage of float suggests that breakouts could be extreme because of the higher demand from short covering. As we saw in January, that "panicked" buying can be achieved in just a few short days. Therefore, on breakouts, don't worry about trying to grab every cent possible. If you can make money from this strategy, just take it and be happy.

To determine May "hot stocks" on the SSCL, I ran a scan against the entire ChartList, looking for stocks with daily PPOs greater than 1 and with SCTR scores > 70. This combination reflects bullish momentum and solid relative strength. Only 4 of the 42 stocks on our updated SSCL met this criteria. They are as follows:

CVM is featured below. The other three have seen various levels of pullbacks, but VXRT is at key gap support where it's recent strength began:

I would be concerned if VXRT cannot hold 6 on a closing basis.

Theme

It's definitely biotechs ($DJUSBT). There are 11 biotech stocks on our Short Squeeze ChartList, which means they represent more than 25% of this list. Should biotechs begin to outperform, the odds of these stocks posting big returns would obviously increase. So let's look at the DJUSBT and see what needs to happen here:

I see a bullish pattern (ascending triangle), but the group has been a terrible relative performer. We are closing in on key long-term relative support, however. So if that relative support holds, and biotechs and forge to new highs after an ascending triangle printed, the odds of further market rotation into biotechs would increase significantly, in turn providing the possibility of short squeezes in our SSCL biotech stocks.

Recent Winners

In learning to spot potential short squeezes, it's always helpful to review the signs of stocks that have worked in the past. We saw MASSIVE volume spikes to accompany explosive moves higher back in January. Looking at charts like GME, BLNK, and AMC back in January will give you a sense of what can happen when panicked buying meets heavy short interest. More recently, we've seen fewer of those explosive moves to the upside and the hysteria from a few months ago has really settled down. There still have been solid performers from our Short Squeeze ChartList (SSCL), however:

ASO:

The short percentage of float has fallen significantly on ASO - from 47.38% to 30.62% over the past few weeks. That reduction is the result of short covering that pushed ASO to breakout levels. Volume has been very strong, as you can see from the above chart. ASO is a stock that I had previously featured on a Daily Market Report (DMR), citing the heavy short interest. It remains a solid relative performer among specialty retailers ($DJUSRS). So long as that continues, ASO will likely terrorize those shorting it.

CVM:

There was a huge volume surge in April when CVM spiked to test its early February closing high. It was unable to clear it and we've seen recent selling back to gap support near 20. Should biotechs begin to bounce, CVM would be an interesting candidate, although the true "short squeeze" would not likely materialize unless the stock is able to clear 28 on a closing basis. I'm generally not a "buy on a pullback" kinda trader when it comes to short squeeze candidates, but I do find CVM interesting, so I bought a SMALL number of shares. PLEASE keep in mind that small biotech companies can be devastated by any poor drug-related news. I've seen stocks drop 80% before overnight, so taking any position on a biotech stock involves considerable risk. That's why I typically take very small positions in stocks like this.

Watch This Recent Breakouts/Setups

It looks to me like GOGO could be a nice candidate for a short squeeze:

GOGO (28.50% of float short):

There are some very positive developments taking place here. The blue circles show all the recent technical strength occurring. On Monday, GOGO closed barely above recent price resistance. Today, we're attempting to add to it. The intraday high today and yesterday was exactly 11.77. The closing breakout level was 11.28 until we saw GOGO close at 11.36 yesterday. Another close higher today would be bullish, especially if we see volume pick up into the close. Failure to sustain the recent strength, however, with a close back beneath 11.28 would be short-term bearish.

Enjoy your week and hopefully we'll begin to see more bullish action taking place on our Short Squeeze ChartList stocks.

Happy trading!

Tom

EB Monthly Short Squeeze Report - February 2021

Tom Bowley — Sun, 31 Jan 2021 17:33:00 +0000

Short Squeeze ChartList

The Short Squeeze ChartList (SSCL) can be found on our website. Under "Members", click on "ChartLists". Then simply scroll down until you see this ChartList. Click on the link provided and type in the password that's provided next to the ChartList link. You can then view the ChartList, or download it into your StockCharts.com account, provided that you are either an Extra or Pro member at StockCharts.com.

Hot Stocks

It might be difficult to duplicate what we did in our first Short Report last month. We featured 10 stocks with solid momentum and excellent relative strength and here was their performance during the month:

Everyone's talking about Gamestop (GME) now. We've been talking it being the Mother of all Short Squeezes since it was featured in our September 2nd EB Digest. It has been on the top of every Short Squeeze ChartList that we've generated - an unbelievable number of shorts. Hopefully you now understand the significance of short interest and the impact it can have on performance. Don't EVER short companies that already have high levels of short interest. It's not worth the risk as many hedge funds and institutions can now attest. While GME is clearly an anomaly, the other 9 stocks that we provided last month also did exceptionally well collectively as a group.

What can we do for an encore?

Well, I'd be careful with GME. The longs ended January in charge for sure, but there are a lot of new investors that believe it's a slam dunk to make money in the stock market now. Historically, that type of thinking leads to big losses. You don't want to be the last one standing when the music stops.

For this month, I'm featuring stocks on our Short Squeeze ChartList that are beginning to accelerate and show strength, but I want to avoid some that had massive gains last month. I've received several emails asking how can you set a target on a stock in a short squeeze. My answer is that you cannot. There's honestly no way of telling where the rainbow ends during a period of enormous panic. Who thought the S&P 500 would lose 35% in 4 weeks in March? Panic does strange things to our psyche. Short squeezes may be even crazier because short sellers are faced with unlimited losses. You just want to make sure you're prudent about taking profits and don't worry about leaving money on the table. If you find yourself in a position of not knowing whether to sell or not, consider selling half. You'll be 50% genius no matter which way the stock goes after that.

To determine February "hot stocks" on the SSCL, I ran a scan against the entire ChartList, looking for stocks with daily PPOs between 3 and 7 and with SCTR scores > 80. This combination reflects strong momentum and excellent relative strength. There were 11 returned as follows, in order of highest to lowest SCTR score:

I would also add two others with PPOs in that 3 to 7 range, but that don't have SCTR scores - RXT and SDC. There's your baker's dozen - the 11 listed above from the scan plus RXT and SDC.

Recent Winners

In learning to spot potential short squeezes, it's always helpful to review the signs of stocks that have worked in the past. Here are three short squeeze explosions from January:

GME (138.08% of float short):

AMC (68.93% of float short):

FIZZ (62.52% of float short):

There are two unmistakeable common ingredients in all 3 of these short squeezes. First, there's a HUGE number of shorts on each of these as the short % of float is above 60% on all 3 and, of course, well over 100% on GME. Second, check out the volume that's accompanied the action recently. That's not just a "spike" in volume, that type of volume tells me there's PANIC in the air. Panic leads to short squeezes.

Watch These Recent Breakouts/Setups

Here are a couple short squeeze candidates that I have my eyes focused on right now:

SPCE (81.53% of float short):

WKHS (31.76% of float short):

Both SPCE and WKHS have seen volume increase and prices surge a bit, but not quite to the same degree that many of the MASSIVE short squeeze stocks did last week. I'd expect further strength in these two, but please remember that short squeeze candidates carry tremendous risk. Many posters on social media might suggest this is easy money, but we all know better. The most important thing to consider is keeping any position size relatively small. As was shown last week, you don't need big positions to see big returns. Always keep one eye on the amount of risk you're willing to take.

Well, that's it for The Short Report's second publication.

Happy trading!

Tom

EB Monthly Short Squeeze Report - December 2020

Tom Bowley — Sun, 03 Jan 2021 09:25:00 +0000

Short Squeeze ChartList

Hot Stocks

To determine "hot stocks" on the SSCL, I ran a scan against the entire ChartList, looking for stocks with daily PPOs > 5 and with SCTR scores > 90. This combination reflects strong momentum and excellent relative strength. There were 10 returned as follows, in order of highest to lowest SCTR score:

I would consider these 10 to be among the best short squeeze candidates as short sellers are already under tremendous pressure, given the recent absolute and relative strength.

AWH is a biotech, so understand the higher inherent risk involved because of that, but I like the chart pattern here. After a lengthy consolidation throughout the second half of 2020, AWH recently broke out on increasing volume. 23.5% of its float remains short. If those short sellers begin throwing in the towel, we could just be starting a significant trend higher. Here's the chart:

Please keep in mind that while short squeeze candidates present tremendous short-term upside, they also can fall apart quickly. Many are heavily short for a reason. Therefore, understand that the risks of trading these stocks are high and not for everyone.

Recent Winners

In learning to spot potential short squeezes, it's always helpful to review the signs of stocks that have worked in the past. Here are three recent short squeeze stocks that have exploded:

SPWR:

Take a look at those two channels that I've highlighted. In the first one, SPWR printed a higher daily low for 10 consecutive sessions. In the second uptrend, SPWR printed a higher daily low for 9 consecutive sessions. Heavy volume and day-after-day gains are hallmarks of a short squeeze. Therefore, one possible way to mitigate your downside risk is to keep an intraday stop just below the prior day's low. If you catch one of these "waves" to the upside, such a strategy can bank a big profit in a very short period of time.

BLNK:

BLNK's gains came in the "blink" of an eye. The first channel took place over just 6 days (higher lows every day). The second channel covered 8 days of higher lows. Even if you don't catch one of these until they break above prior resistance, there can still be outrageous gains to be had. In my opinion, these stocks are NOT long-term buy and holds. You make your money and EXIT. Their nature is that of a very short-term trading vehicle. It's very important to stay disciplined. If the trend breaks, take your profit. If it's a false breakout and a reversal occurs, take your fairly small loss.

In hindsight, these trades look like a very easy way to get rich quick. In reality, and while you're trading them, your emotions will run wild. For that reason, I tend to take smaller positions than normal when I'm trading a possible short squeeze. That will help allow you to make rational decisions about your position.

Watch These Recent Breakouts/Setups

Here are a couple short squeeze candidates that I have my eyes focused on right now:

MIK:

MIK could be on the verge of a significant upside move. Volume was fairly decent last week, especially when you consider that volume during the holidays tends to be very light. If you decide to take a position, simply watch the prior day's low. Again, I use this as a stop in order to remain disciplined and not lose a huge %. Normally, with this strategy, you can keep losses fairly moderate, perhaps in the 3% to 5% range.

DDS:

If you're a subscriber to our EB Digest newsletter, then you may remember me featuring DDS on November 30th. I was asking the question (out loud) whether DDS could be the next big short squeeze stock. Well, it's up close to 30% in a month and currently on a heater to the upside. It's now printed higher intraday lows for 7 straight days. Shockingly, however, volume hasn't accelerated. It's difficult for shorts to truly be squeezed if volume is light to moderate. Should the volume begin to accelerate, we could just be seeing the start of a major squeeze higher.

Well, that's it for The Short Report's first publication. I hope you enjoyed it and, as always....

Happy trading!

Tom