Sunday, June 8, 2008

Anatomy Of A Super Short Squeeze

Short Interest in MXC: 27% of Float.

Short Interest in PDO: 15% of float.

Notice that the breakouts came from very long bases. The stock breakouts should be detected on the 52 week highs scans or percentage gainers scans. Ride out the breakouts till you see a reversal stick. Just remember, huge winners come out of long bases. As long as the high short interest is present, just know that the potential of a HUGE short squeeze is very possible. The Super Short Squeeze usually shows after the stocks has worked it's way higher for a few days/weeks and then you'll see a ONE day huge percentage and dollar gain. Most traders will be scared to go long after a huge percentage increase in the stock price but you gotta get long and ride out a squeeze until you see a clear reversal stick. usually the stock will open higher the following day and run for several days in similar fashion.
Ideal play, take a big position early in the move and trim as the stock continues to climb.
On the reversal day, the stock will usually gap up on HUGE volume and the stock will turn into the RED and accelerate lower and go deeper and deeper into the RED and that will usually start a several day decline. That is usually followed by an NR7 bar the stock might setup one more last smaller run before topping out for good.

Good trading!


Anonymous said...

soo...the next question is how to we premptively find these candidates?

Stewie said...

hey B-rad: now we wait and track the 52 week highs and percentage gainers lists daily for those candidates. track and follow their progress.

HPT said...

I put MXC in the simulated account LONG friday. I caught it on the scanner awhile back. The Float is so small, I imagine they are going to pull some bullshit and split mid-day and keep rallying until something happens or I dunno... I remember this stock NICH back in 2006 more than doubled in a day and they did a 3:1 split before the next days market open without any announcements or anything. Low Floaters can be a shorts worst nightmare, because there is no telling how much they will spike before they come back down.

Anonymous said...

so is that last mxc chart a 15 min, or daily chart? thanks.

Stewie said...

that mxc chart is a daily but i zoomed in for better clarity.

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