Tuesday, January 10, 2012

Shortsqueeze watchlist

The following names (TZOO, RENN, GMCR)
1, have been down big in the last 52 weeks (like 50 - 70%).
2, are heavily shorted with a short interest of higher than 30%
3, low float (not low low) compared to the stocks in the same space as they are in
4, All of them are posting consolidation in the last few weeks.
5, every trader and their mother are bearish and short on this list.

Look at NFLX for the trading cues. Let the stocks consolidate. Let the price cross (and close) the 50 DMA on a daily basis. Buy a small position with a wide stop of 5 - 10%. Add more if the 10 DMA and 20 DMA cross the 50 DMA. If they break above 50 DMA, they have potential to go crazy higher.

If the consolidation doesn't lead to breakout above the 50 DMA, no trade. No problem but wait for the play. Don't jump ahead of the game. NFLX is the example, others to follow. It may take few days/weeks for this to happen.


I have no positions in any of the above at this time but I will enter should the play come to fruition. I am not impressed with the fundamentals of any of the stocks, it is a pure technical play.

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