EarningsBeats Digest

Published: Wed, 11/03/21

EarningsBeats.com Digest for November 3, 2021

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Conditions Are Ripe For A Major Short Squeeze

Short squeezes can occur when the following conditions are met:

(1) A stock is heavily shorted with a short percentage of its float greater than 20%

(2) That stock's PPO turns positive, suggesting that price momentum has turned bullish

(3) Price breaks out to intermediate-term highs, forcing underwater short sellers to buy back their borrowed shares

(4) Volume begins to surge WAY above normal levels (panic required for a short squeeze)

For the first time since December 31, 2020 (just prior to the massive short squeezes in January 2021 - think GameStop (GME)), the majority of our Short Squeeze ChartList (SSCL) stocks (25 out of 45) have PPOs above zero. That means momentum has shifted towards the buy side and more and more short sellers are finding themselves underwater. That, in turn, could begin to light a fire under short sellers to cover their short positions (ie, BUY). One week ago in my Daily Market Report to EarningsBeats.com members, I discussed Ocugen, Inc. (OCGN), which is currently on our SSCL and has a short percentage of float above 27%, a very high number. It was trading at 11.58 at the time. It traded as low as 8.31 and as high as 16.28 since that time. This type of volatility is fairly normal for these high octane short squeeze candidates, so you must be aware of the potential for huge price swings in either, or both, directions. Here's the current chart of OCGN:

Check out that soaring PPO as bullish momentum explodes. I mentioned earlier that 25 of our 45 SSCL stocks now have PPOs above zero. To put this in perspective, consider how many stocks in prior SSCLs had positive PPOs:

July 31: 8 out of 38

August 31: 11 out of 35

September 30: 10 out of 42

Today: 25 out of 45

Before one of the biggest short squeezes in history in January 2021, our December 31st SSCL had 38 out of 67 with positive PPOs. You cannot have a short squeeze without bullish momentum and increasing volume scaring the bejesus out of short sellers. We are scratching the surface of what could be another MAJOR short squeeze. We currently have 45 stocks on our Short Squeeze ChartList, many of which could be on the verge of an explosion higher. Even our 30-day free trial members have access to this list. If you'd like to see our latest Short Squeeze ChartList, please sign up for your 30-day FREE trial HERE!

Happy Trading!

Tom Bowley
Chief Market Strategist

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