EarningsBeats.com Digest for May 29, 2020
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Dear Digest Subscriber,
Next Monday, June 1, at 4:30 pm eastern, Chief Market Strategist Tom Bowley will be conducting a webinar discussing our "Short Squeeze ChartList" that contains over 140 stocks that have high short interest that can work to the benefit of those looking for high reward to risk long trades. We'll make sure that everyone gets Zoom instructions prior to the start of the event on Monday. You won't want to miss this one!
Stalking Potential Short Squeeze Opportunities
The fear has been intense since the February 19th top and that's resulted in a large number of big bets against U.S. equities. Short sellers "borrow" shares, sell them, and then hope that prices head lower so they can profit from the decline. It all works well....until it doesn't. One huge problem with short selling, however, is that you have unlimited risk as prices begin to rise, break
out, and set new highs. I've featured a few "short squeeze" stock candidates in recent months, namely Tesla (TSLA), Peloton Interactive (PTON), and Ollie's Bargain Outlet Holdings (OLLI). While they've all three performed quite well, there is no guarantee in trading ANYTHING. So keep that in mind as you approach any potential trade candidate. With that in mind, I do like the recent action in Charter Communications (CHTR):
Like so many other companies, CHTR lost more than a third of its value in less than a month back in February/March, but it has since rallied back strongly. Its relative strength vs. its broadcasting & entertainment peers ($DJUSBC) has been very solid and suggests we could see further gains ahead. CHTR now has $4.6 billion in short shares and that ranks it as one of the highest dollar volume shorts in the entire U.S. equity market. Volume
has increased the past two trading sessions as CHTR has broken out. A significant resistance level at 542 (all-time high close) awaits the bulls. If that level is cleared, I'd fully expect to see short sellers rushing to cover and sending CHTR shares higher.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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