EarningsBeats.com Digest for April 4, 2022
|
Trading Places Live!
Join Tom Bowley for a briefing on market activity on Mondays and Wednesdays from 9-9:30 am EST before the opening bell. Click here to listen live or visit our YouTube page later today to view the recorded session.
Strong Earnings ChartList
At EarningsBeats, we develop a number of ChartLists to make it easier for our members to find high reward-to-risk candidates. Our flagship, the Strong Earnings ChartList (SECL), currently contains 489 companies that have beaten Wall Street consensus estimates as to both revenues and earnings, are liquid, and have solid technical charts. It is updated every 2-3 weeks for members; but, today only, we will be sharing it with our free community
to thank you for your subscription to this newsletter.
If you are a StockCharts member, you can save this ChartList directly into your account. First, log-in to your StockCharts account in a separate tab within this browser. Then, click the link below and enter the password (SECL8332). You'll have the choice to add a "new list"; then, check the "Include ChartStyles" box if not already selected as the default. This will ensure that you can view our annotations.
Smile and say "SQUEEEEEEZE"
Short sellers (traders who sell borrowed stock) tend to pile on companies, sending their prices spiraling lower and lower and lower. But occasionally, good news surfaces, a stock spikes and those who had been shorting must begin to think about covering (buying and returning their borrowed stock) - potentially all at the same time. If they
collectively decide to push that button to buy, you get what's referred to as a "short squeeze". A short squeeze can send a stock's price soaring very, very rapidly. If you're ever owned one, it's likely been one of the most gratifying trading experiences of your lifetime. GameStop (GME) was perhaps the most famous example as that short squeeze CRUSHED short sellers, rising from 18 to nearly 500 in just over two weeks. At EarningsBeats.com, we maintain a Short Squeeze
ChartList (SSCL), which currently features 39 of the most heavily-shorted companies. One of those is SmileDirectClub (SDC). Its chart currently looks like this:
SDC's momentum is stronger than at any point over the past year. Its AD line has moved to a 3-month high. Its peer group - medical equipment ($DJUSAM) - hit a 10-week high on Friday. There's reason to believe that SDC could be on the verge of a major move higher. SDC's short % of float, which tells us the percentage of shares available to trade that are shorted, is nearly 31% - a VERY high level. There's just one problem. Many
of those that have shorted SDC are still making money, or at least not losing much. However, if SDC can break above the 3.00-3.15 price resistance zone identified above, many of those shorting will begin to see their losses mount. That, in turn, could trigger buying and send SDC shares higher, encouraging more shorts to cover (buy). This is what's referred to as a short squeeze. Will it materialize? I don't know. But I do know it's worth
monitoring.
In our April Monthly Short Report, I featured two other stocks that could be setting up for a potential short squeeze. I'll provide more information on those in Wednesday's EB Digest, plus another surprise gift! Stay tuned!
|
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
|
|
|
|
