EB Digest: Wednesday Edition

May 23, 2025

FEATURED ARTICLE

Is This Penny Stock About To See A Massive Short Squeeze?

When I updated our Short Squeeze ChartList (SSCL) over the weekend, I couldn't believe there were 76 stocks on it.  That's the most I can ever recall, suggesting that bears are using the recent runup in stock prices as an opportunity to short stocks, believing that they're frothy and quite extended.  Nothing else has worked in ending the current 6-7 week rally, but maybe a wave of short sellers can do the trick.  Meanwhile, this presents quite an opportunity for those on the long side.  The best thing about heavily-shorted stocks is that there are guaranteed buyers ready to push stock prices higher and higher when breakouts occur.  If you like penny stocks, check out Ocugen, Inc. (OCGN), which closed at a 4+ month high on Tuesday and saw slightly-above-average volume:

Enter Ocugen, Inc. (OCGN)

First, let me tell you that I rarely trade stocks under $5, much less $1.  Also, you need to understand that many of these shorted stocks are shorted for a reason.  Most stocks on our Short Squeeze ChartList drift lower and lower and lower.  Wolfspeed (WOLF) is on our Short Squeeze ChartList and, according to the Wall Street Journal, WOLF is preparing to file for bankruptcy within weeks.  So you do need to understand the risks involved in taking long positions on heavily-shorted stocks.  Getting back to OCGN, though, you can see that the stock made a slight breakout on Tuesday and did so with volume creeping up above the 50-day SMA of volume.  That's a start, but if you really want to see a short squeeze explosion, volume will likely need to jump by 4x, 5x, or even higher, to support a potential squeeze.  Since the recent mid-March bottom, OCGN has seen its AD line rise, as well as its relative strength vs. its biotech peers ($DJUSBT).  The next couple days will be very interesting, but volume will be key.  I'd want to see a MASSIVE jump in volume to accompany a further rise in price.

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