http://evilspeculator.com/?p=29696Trading a Short Squeeze:
How to scan/enter a long in anticipation of a short squeeze:
- Look for stocks that have high short interest, or a days to cover ratio greater than 10 for not well established companies. The number is 5 or greater for established (financially proven) companies.
- Look for stocks whose short interests build up while prices stagnate and lurks just under resistance.
- Look for earnings release dates and match that to the short interest as earnings will be used as an excuse to squeeze.
- The instrument is trading above the 20 day SMA on a slightly above average volume prior to the event.
- If the instrument trades below the 20 day SMA prior to the event, but the volume is slightly higher than the average daily volume, you want to see the price trending higher into the event and above the daily acceleration line.
Bollinger band method is based on three fundamental principles:
- Once an instrument reaches the Bollinger band, it has the potential to push the band limit given the right trending conditions;
- Once an instrument starts pushing the band, the trend may be strong enough to cause a profitable squeeze quickly or a sizeable gain over time; and
- Should the instrument’s price becomes embedded in the Bollinger band, stop looking for reversals and let the market forces slaughter players on the other side of your trade for you.
I posted this question for Fearless in a previous thread. Trying to get an concept of short squeeze thru my thick skull, spent two nights on scanning for stocks that fit Fearless criteria, but still... you know ...not sure.
Maybe Mole or Skynard or somebody can help to check my reasoning. Any comments are welcome. Thanks
"Still trying to work out picture and user name. But I have an urgent question re "squeeze candidates".
8.7 short ratio, within spitting distance from 52week and 3year high, right
between 20 and 50 ma. Earnings on Aug 15. PF target 14 (almost 50% up from here).
Than I look at VALE and don't see anything of a kind.
Respect your opinion alot and would appreciate a reply. Thanks"