A lot of new traders struggle to recognize the best stocks to trade…
And even if they’re watching the right stocks — they don’t know which key levels to use for an entry, stop loss, or goal for their trade.
That’s why I’m here to help you…
I hand out FREE trade ideas and plans every week to new and experienced traders.
And my plans from this week’s watchlist gave traders the chance to catch a 30% move in Tupperware Brands Corporation (NYSE: TUP) yesterday!
But while you might make money for those free trade ideas — you’re not learning anything.
You’re just following along…
And while making money on a winning trade is great, what I try to do is teach traders a process and methodology to trade for themselves.
So today I’m breaking down what I saw in TUP on Friday that made me think it was heavily shorted and had the potential to squeeze…
Once you learn these signs, you can spot stocks with squeeze potential in advance for yourself.
The Signs That Can Indicate a Heavily Shorted Stock
On Friday I gave traders a plan for TUP in my Pre-Market Prep morning webinar…
And while the move didn’t happen on Friday … The stock gave us clear signs that the move could still happen.
It was a classic example of not if, but when…
So when the stock was gapping up yesterday morning, I gave traders the same plan as Friday.
Cut and pasted plan from Friday today is exactly the same on $TUP
7/28/2023
$TUP
Remember again, as discussed in extreme detail on PMP and yesterday, WE NEED A DIP TO LURE IN SHORTS, we want the exact same pattern as yesterday, no dip be VERY careful on this….. We know this will end badly for the true believers.
Signal: $3.60
Stop: $3.30
Goal:$4+
We were looking for a similar move as we saw on Thursday when the stock dipped at the open and then ripped from $2.30 to $3.75.
How did I know the stock was heavily shorted and why was I so confident we could get a big squeeze?
You always hear the term, it’s a heavily shorted stock…
But how do you know? Short interest listed on websites is old data — it’s not real time.
Here’s how I knew TUP was ripe for a squeeze…
Look at what the stock did on Friday…
TUP chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
The stock was downtrending all day. Basically, it was deader than dead sitting at the low of the day at 1:30 p.m. Eastern…
Then all of a sudden it goes from red to green after 2 o’clock (one of our favorite times to trade), and it just explodes higher for absolutely no reason.
It was a slow afternoon, there wasn’t much going on, there was no news about the stock, and the market wasn’t ripping into the close…
Nothing changed for TUP at 2 p.m. on Friday, and it basically spiked almost a dollar per share.
That’s the sign we look for.
Now, if there was a press release or like some sort of news, or let’s say the market was just raging into the close — that’s a different story.
But an explosive move like that and the fact that it went green on the day tells me a stock is loaded with shorts and has the potential to squeeze.
That’s why the stock was on my free watchlist on Sunday.
And that’s why in Pre-Market Prep yesterday, I gave traders the same plan…
A break above $3.60 was the signal … And when we got that, it led to a 30% move.
TUP chart: 2-day, 5-minute candle — courtesy of StocksToTrade.com
So next time you see a stock have a crazy trend reversal for no reason — it’s likely due to short sellers.
And if there’s a key level close by, you can use that as a potential entry to ride the squeeze higher.
Make sure you open your free weekly watchlist every Sunday!
If you want to stay up to date on all my trade ideas and plans — see how you can get into Pre-Market Prep here.
Or get my Market Update videos three days per week!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade