From the Desk of Steve Strazza @Sstrazza
As our Premium Members already know, we have a laundry list of scans that we run internally on an almost daily basis.
Different market environments, naturally, are more conducive to certain scans and less so to others.
We think our Freshly Squeezed scan is perfect for the current market. In fact, we wrote our initial report in December just to be sure we wouldn’t miss the moves that have taken place in recent weeks. We’re confident there is more to come.
With so many individual issues in massive drawdowns as the broader market begins to turn a corner, we’re witnessing some serious short-covering rallies in some of the most beaten-down names.
In fact, it’s already starting to happen. Bed, Bath & Beyond $BBBY was up by almost 100% the other day. It’s very likely they’re going bankrupt. But that’s just the kind of market we’re in.
Our scan is quite simple. It is designed to identify stocks with the highest short positions. When a stock is heavily shorted, we know there are incremental buyers waiting in the wings.
We love this as new buyers are the one true catalyst for higher prices. When shorts are proven wrong, they have to buy their shares back to close out their positions. And when they do, and momentum starts moving higher in these shorted names, it is not uncommon for massive rallies to occur.
For this reason, we pair short-interest data with short-term momentum overlays, as this is the match that is needed to spark a squeeze.
Let’s take a look at what’s popping up on our radar right now and outline setups in some stocks we think investors can squeeze profits out of in the weeks and months ahead.
We’ll also give an update on some of our long ideas from December’s report.