August 2021

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

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 3 stocks. Here they were at that time:

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