In this scan, we look to identify the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn't just end there.
We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
We use sentiment to help put the behavior of the stock market into context.
When looking at markets, it's easy to see what stocks are doing. All you have to do is look.
But what are people thinking? That's what we want to know.
When everyone is bullish, it's hard for stocks to go up in price at the same rate. When everyone turns bearish, that's historically a great time to be putting money to work.
Coming into August, sentiment was running hot. The VIX was at 10, the put/call ratio was muted, newsletter writers were giving us some of their most bullish readings of all-time, and our sentiment composite was as complacent as it's ever been.
Boy did that change quickly.
We just saw the largest week over week spike in bears among individual investors since 2022, just as this bull market was getting started.
Our choice of investment vehicle in the crypto space isn't just limited to altcoins and tokens, but there is also of course a wide variety of publicly-listed companies to choose from.
I've talked at length about the Bitcoin mining stocks, albeit less in recent times. While many of these stocks have broken down, there could be an opportunity shaping up in many of these stocks.
Last week saw an incredible amount of investor panic.
Often, you want to take the other side of this emotion. But before we do this with any conviction, we need to see market trends shape up in more bullish fashion.
We entered Bitcoin long on bear's inability to hold the breakdown below 56,000 and Ethereum's retest of 2,000. But apart from this, I'm still maintaining a neutral short and intermediate term directional bias in the crypto markets. I would like to see prices shape up more definitively, which can take some time following corrections such as these.
Stocks with high short interest are proving resilient, even in challenging market conditions, as the bears struggle to drive down even the most hated names.
With this in mind, it's time for another Freshly Squeezed report.
Here's our approach:
We find the most heavily shorted stocks in the market. Then, we monitor these names for signs of upward momentum. Once that momentum kicks in, we ride them higher as the bears get squeezed.
We got fresh short data on Friday, so let's dive in and talk about it.
Our scan is quite simple. It is designed to identify stocks with the most aggressive short positions.
When a stock is shorted, it means 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. In many cases, this happens as momentum flows into these names and fuels massive short-covering rallies.
We've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.
For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.
That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.
We expanded our universe to include some mid-caps.
Nowadays, to make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.
