July 2022

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