Guess what I love more than most anything in the market??
Short sellers!
I used to be one…But that’s not the reason I love them today.
I love short sellers because they create fantastic profit opportunities for day traders. I’m playing against them in the market now, and it’s awesome…
I’ve turned on my own people!
In fact, I even have a service called the Weekly Squeeze Report, which is dedicated to making money off of short sellers.
I do this because I want to share the thrill of profiting from short squeezes with all of my subscribers. I want you to experience the excitement I feel when the perfect setup plays out in our favor.
The Weekly Squeeze Report comes out every Thursday evening and is part of my Daily Income Trader program.
As a Daily Income Trader subscriber, you get five daily webinars, my Weekly Squeeze Report, access to our proprietary trading tools, including Oracle, our algorithmic system, and much more.
Read more about Daily Income Trader here.
Last week’s squeeze pick worked out perfectly, and I want to walk you through exactly why I chose it and why it worked out so well.
The Short Squeeze
You’ll hear a lot of buzz about short squeezes, especially with low-priced or low-float stocks. But what really is a short squeeze? What should you look for, and more importantly—how do you profit from these massive movers?
I’ll use my Weekly Squeeze Report pick from last week to explain.
Here’s an excerpt of what I sent out to my subscribers Thursday night:
Weekly Squeeze Report
(September 19, 2024)
Stock: Galmed Pharmaceuticals Ltd (NASDAQ: GLMD)
Entry: $9
Target: $13-14
Stop: $8
Along with the information above, I also include a detailed written analysis of why I chose that stock, accompanied by a video explainer.
It starts with a stock that’s already on the move, thanks to some news or other catalyst.
In GLMD’s case, on Thursday, the 19th, it had positive news regarding some of its drugs currently in development.
That’s enough news to spark some buying interest. But when the shorts jump in, it’s like dumping gasoline on that fire.
The reason this happens is because shorts are forced to panic buy.
Look at it from the side of the long position: If you’ve ever owned a stock that’s tanking, you start to panic. You need to get out as soon as possible before maximizing your loss.
The same thing happens on the short side. Shorts panic-buy to cover the shares they’ve shorted, which only pushes the stock even higher.
This creates that huge upside momentum, where the stock keeps skipping up in price, and it feels like there’s no stopping it.
And the great thing is, you don’t need to catch the beginning of the move. The magic happens on day two.
In GLMD’s example, it spiked on Thursday and then faded into the day’s close. That’s a key signal for me—what I call “collecting shorts.” As the stock fades, more and more shorts pile in, thinking the stock’s run is done.
See, that first-day move is often just the start…
But day two? That’s where you can get the meat of the pattern and can really capitalize.
When day two rolls around and the stock gaps up again, the squeeze is officially on.
Here’s the chart for GLMD over Thursday, when the Weekly Squeeze Report went out and Friday, when the short squeeze played right into our waiting hands…or wallets, as it were!
GLMD 2-Day, 5-Minute Candles Chart; SteadyTrade
Anyone who followed my entry price instructions of $9 per share could have made a very quick 40%* profit.
By the way, many of these short squeezes happen on Fridays because the shorts are nervous about holding stocks over the weekend. The fear of more positive news or another catalyst haunts them and they close their positions.
And that is precisely why I send my Squeeze Report out every Thursday night. It’s the prime time to take advantage of these setups.
Remember, the real opportunity comes on day two. And that’s the beauty of these setups—they’re often telegraphed the day before.
To learn more about short squeezes and other great trading patterns for both newbies and veteran traders, tune in to one of our free StocksToTrade webinars.
They run all day and offer trading tips and tricks, information about how we use our proprietary Oracle system, and much more.
Have a weekend, everyone. See you back here on Monday.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
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