EB Monthly Short Report - April 2022
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