Last week, we released a Freshly Squeezed report detailing long setups in some of the market's most heavily shorted stocks.
This week, we got fresh short sale data from FINRA as well as fresh breakouts from a growing list of stocks in our universe.
We thought it would be irresponsible not to do a follow-up report covering them.
This is just the environment we're in.
Here's what we're doing about it.
Our scan is quite simple. It is designed to identify stocks with the highest short positions. When a stock is heavily shorted, incremental buyers are waiting in the wings to close out their bearish bets.
We love this, as new buyers are the one true catalyst for higher prices.
When shorts are proven wrong, they become buyers of the stock. Many times, as this happens, momentum comes into these names and fuels massive short-covering rallies.
For this reason, we pair short-interest data with short-term momentum overlays, as this combination is needed to spark the moves we’re looking for.
Here's the latest list:
Our Freshly Squeezed table contains stocks that have a short interest greater than 15% and a market capitalization greater than $.5B. The universe is then sorted by 1-month change.
Our first setup of the day is the $7.8B ride-hailing platform, Lyft $LYFT:
Lyft is sporting a 15.5% short interest and a 3x days-to-cover ratio.
The stock is on the verge of completing a multi-year basing pattern and embarking on a new uptrend. The upper bounds of the base coincide with a massive volume pocket.
The hefty short interest combined with an absence of price memory could combine for a swift gap-fill rally.
We want to own LYFT above 21.30, with a target of 30.50 over the coming 2-4 months.
Our following setup is a $1B pollution & treatment controls company, PureCycle Technologies $PCT:
PureCycle Technologies is rocking an extreme 14x days-to-cover ratio and a 30.5% short interest.
The stock is in the process of completing a multi-month basing pattern. PCT has formed a tight continuation pattern at the upper bounds of this base, suggesting it could be building up energy for the next leg higher.
If and when we get a breakout, we expect the stock to quickly move through the volume pocket above.
We want to own PCT above 6.50, with a target of 9 over the coming 2-4 months.
Next, we have the $3.9B wire & cable manufacturing company, Encore Wire $WIRE:
Encore Wire is flaunting an 18x days-to-cover ratio and a 22.8% short interest.
The stock is printing new all-time highs and is gapping above a key Fibonacci extension level.
We want to own WIRE above 250, with a target of 318 over the coming 2-4 months.
Next, we have the $2B quantum computing company, IonQ $IONQ:
IonQ is sporting a 24.5% short interest and a 6x days-to-cover ratio.
The stock has been consolidating at a well-tested polarity level as it looks for a floor following a roughly 50% drawdown from last year's high.
We want to own IONQ above 9, with a target of 12.50 over the coming 1-3 months. Our target is the VWAP anchored to the former high.
Next, we have a $1.8B clinical-stage biotechnology company, 4D Molecular Therapeutics $FDMT:
4D Molecular Therapeutics has a 19.5% short interest and an 8x days-to-cover ratio.
The stock has more than tripled off its Q4 lows, completing a multi-year basing pattern in the process.
We want to own FDMT above 36, with a target at the all-time high of 55 over the coming 2-4 months.
Our next setup is the $2.6B oil & gas E&P company, Comstock Resources $CRK. Our Inside Scoop recently reported that Jerry Jones, the owner of the Dallas Cowboys, purchased $100 million dollars worth of this stock.
Comstock Resources has a 24.7% short interest and a 5x days-to-cover ratio.
The stock is in the process of completing a multi-month bearish-to-bullish trend reversal.
We want to own CRK above 9.30, with a target of 13.30 over the coming 1-3 months.
Our final setup is another exploration & production company, CNX Resources $CNX:
CNX Resources has a monster 10x days-to-cover ratio and short interest north of 20%.
This week, the stock broke out of a multi-year base-on-base pattern with authority. We think the squeeze is on.
We want to own CNX above 23, with a target of 32.30 over the coming 2-4 months. Our target is based on the measured move of the base.
