A massive short squeeze could be coming in these stocks and that means surging returns. A rising market means short sellers are losing money and these are the stocks to watch! I’m using the screener on Stockcard to find short squeeze stocks. Check it out and use promo code bowtienation for a special discount beyond the free trial! https://mystockmarketbasics.com/stockcarddiscount
In this video, I’ll show you a stock screener to find short-squeeze stocks and what to look for to pick the best. I’ll then reveal the five most heavily shorted stocks I’m watching for the next squeeze! A rising stock market means the return of the short squeeze and the perfect time to search for the next target!
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It’s been a while since this short squeeze investing strategy was popular, with the stock market crash, it seems the short-sellers have won over the last year but with the market rebounding and eventually breaking into that next bull market, it’s the perfect time to revisit heavily shorted stocks. As they say, a rising tide lifts all boats and a rising market will make it even harder for the short-sellers, pushing stock prices higher and threatening a squeeze!
Short-sellers betting the stock price will fall, borrow the shares from a broker and then sell them. They still owe the broker those shares borrowed but the idea is that, if the stock price does fall, the short seller can buy the shares in the market later at that lower price to return them and close out the borrowed position. They get to pocket the difference in price.
But if a heavily shorted stock gets some good news that sends the price higher, short-sellers start to lose money. They now may have to buy the stock at a higher price than they sold it. As more short-sellers rush to buy the stock and close their borrowed position, the price heads even higher, forcing more shorts to buy the stock and this cycle feeds on itself for those massive gains.
That’s why we’re looking for stocks with twenty- and thirty-percent or more of the shares available that are shorted. You’ve potentially got a third of the shares available that short sellers could be forced into the market to buy.
When we’re looking for short squeeze targets, we’re looking for the companies that while they may have made a few mistakes, are still good companies and have the fundamentals to back it up. We’re looking for stocks where all it’s going to take is one good earnings report to bring investors back and have the shorts running for the exits!
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
