To Squeeze or To Be Squeezed

JC Parets
March 23, 2024

There is a time and a place for everything in this market.

One of the more fascinating groups of stocks for me right now (and always for that matter) is when a stock has a very high short interest, and is making new highs.

You see, here's what many people fail to remember:

Short sellers are promising to be buyers in the future. Shareholders are only promising to be sellers.

And so what that means to us is that the more short sellers there are in a given stock, the more investors there are promising to buy the stock in the future.

In their view, they would ideally like to buy these stocks back at lower prices (for a profit).

But what happens instead, in many cases, is that they are forced to cover at much higher prices (for massive losses).

And that's where we come in.

We're looking specifically for stocks with high short ratios, which are the "Days to cover".

In other words, we take the total number of shares which are short, and the average daily volume, to calculate how many days it would take for all the shorts to cover.

The higher the "Short Ratio", as we call that, the higher the probabilities that the short sellers get Squeezed.

We love that.

Here's the latest update to our Short Squeeze Candidates:

There are always really interesting names popping off on this list, regardless of market conditions.

Last year we saw it work really well again and again.

And this year, with all the rotation taking place among stocks and sectors, you're still seeing these squeezes crush short sellers.

Here's the poster child of the short squeeze names. When Carvana is working, there are most likely going to be others on this list working as well.

Somehow over 1/3 of all the shares of $CVNA are still short.

How is that even possible?

This stock is up over 2000% since last year. And investors are still crazy short.

Check out the full post and details on our new Trade Ideas here.

If you're interested in how we build this particular scan, along with several other popular lists that we make, check out this video Strazza and I put together last week.

In this short video, we go over how we build our 2-to-100 Club scan looking for the next $100B company, how we make a list of stocks raising their dividends every year, and the Minor Leaguers Report, which identifies the strongest small-cap stocks before they break out and get called up to the big leagues.

Check out the complete video explanation here FREE.

The Guy Who Taught Me Options

I’ve dabbled in options for a long time.

And why wouldn’t I? Options are a great tool to get more leverage and define your risk.

Over the years I had some nice winners and also some big losers. But I never really had a consistent strategy.

That changed when I met Sean McLaughlin.

Sean is the guy who really taught me how to use options to magnify my gains, hedge my exposure, and express a trade idea in a more versatile way.

When we started working together, frankly it took my trading to the next level.

That’s why I’m excited for Sean to show you what he showed me years ago.

Join us for the (completely free) All Star Options Bootcamp, this Thursday at 4:30 pm ET.

Sean and I are going to walk through his options process, and how he uses our research to find options trades.

It’s going to be amazing. I can’t wait to see you there.

Click here to register FREE.

JC

 

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