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Short Squeeze Mania!

Posted June 28, 2021

Alan Knuckman

By Alan Knuckman

Short Squeeze Mania!

If you’ve been paying even a little attention to market news lately, I’m sure you’ve seen them come up before…

I’m talking about the “meme stocks”!

Whether we’re looking at GME, AMC, or one of the few other stocks that Reddit Trading Bros sent higher, they tend to always be heavily shorted stocks.

This is actually something I’ve been paying attention to for a long time now, although I don’t call them meme stocks…

These short squeeze stocks have been oversold and beaten down, but are building a nice support base to bounce off of. And those shorts have to be called sooner or later...

If an oversold stock is seeing lower lows and lower highs in volatility, then chances are it might be worth a closer look!

There are generally two rules that people follow when looking for short squeeze stocks:

  1. They want the stock to have a short interest of about 10% of the float of the stock
  2. They also want to follow a rule of ten days for the shorts to cover based on the average volume.

So if you’re someone on the hunt for short squeeze opportunities, try and keep those rules in mind!

One that I think is interesting right now is Tootsie Roll Industries, Inc. (TR)... It’s been stuck between $30 and $35 for about a year now…

Earlier in January, the Trading Bro crowd rallied it over $40 while the meme stock mania was going on and, with the heavy interest in short squeeze stocks, there’s always the possibility of that to happen again!

Anything can happen in the market! But as I’m sure you’re aware, playing these shorted stocks carries a fair amount of risk...

They are definitely fun to watch, but if you do decide to trade them make sure you’re exercising caution!

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money
AskAlan@StPaulResearch.com

Trading Tip of The Day: Are People Interested in Earnings Again?

Greg Guenthner Something notable happened last week:

Nike posted a huge earnings beat and shares soared to new highs last Friday.

This is interesting to me mainly because there wasn’t too much market reaction during the previous two earnings seasons...

It seemed like there was so much else going on that earnings beats weren’t as much of a catalyst as they had been in the past.

But with this Nike earnings beat maybe we’re seeing a resurgence in earnings interest?

Maybe people weren’t expecting such a huge beat from Nike? I'm not sure why, that feels like a no-brainer to me…

It might just be that, up until last week, the Summer had been rather slow for stocks and people were looking for any kind of bullish activity…

Either way, with more earnings reports around the corner, I think this is definitely something to keep an eye on. 

Happy Trading,

Greg Guenthner

Greg Guenthner
Analyst, In-The-Money
AskGreg@StPaulResearch.com

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