EB Short Squeeze Report - May 2023
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.
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. We haven't really seen much short squeeze activity in 2023. As a result, sending out monthly reports hasn't exactly been top priority.
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