Well, it was a one and done day for me!
I sent out my weekly Short Squeeze Report last Thursday night for Longeveron Inc. (NASDAQ: LGVN) and it did not disappoint…
My instructions were as follows:
Stock: Longeveron Inc (NASDAQ: $LGVN)
Entry: $3.30
Target: $4+
Stop: $3
Here’s what LGVN looked like premarket Friday morning through the time it hit our target.
LGVN intraday, one-minute candles chart; SteadyTrade
I had a really good feeling about this one for a few reasons.
The first was that it was one of my Daily Double Down picks from Wednesday afternoon and it had already soared from our Oracle signal entry point by 51%*.
Here’s the LVGN chart from Wednesday:
LGVN Oracle Chart
The second reason was that it was the only stock showing up on our Squeeze Master Pro Screener.
That, my friends, is the perfect storm.
I predicted a panic point at $3.30, which was its Thursday resistance level.
And I advised to trade into momentum, or in other words, wait for the stock to print a green candle immediately after hitting $3.30.
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You’re probably wondering what I’m looking for in a potential short squeeze situation…
Or maybe, what the heck is a short squeeze, anyway??
So what is a short squeeze anyway?
A short squeeze is when a stock’s price rises and forces short sellers—those who’ve borrowed shares hoping to buy them back at a lower price—to scramble and buy shares to close out their positions.
The panic to buy back shares drives the price up even more, creating a rapid escalation and intensifying the upward momentum of the price movement.
Examples of past short squeezes
We were able to capture a very recent short squeeze in GameStop Corporation (NYSE: GME).
By the way, this isn’t the first time GME has been the victim of a short squeeze.
My Squeeze Report from Thursday, June 6th called the latest one…
Here’s what happened the day after when Oracle gave the green signal to buy before the squeeze.
The timing was great on this because after we got our 22.29% gain, which came within minutes of the Oracle signal, GME took a snooze for the rest of the day.
Several memorable short squeezes happened with Tesla Inc. (NASDAQ: TSLA)…
Throughout 2020, Tesla was one of the most shorted stocks, with many investors betting against Elon Musk…because, let’s face it, the guy is unpredictable and acts like a nutcase much of the time.
Despite all the naysayers and short sellers, the company consistently delivered strong financial results and secured a spot in the S&P 500…
So, the stock price surged based on the company’s strong fundamentals.
This relentless rise forced short sellers to cover their positions, driving the stock price even higher.
Take a look at TSLA’s chart from mid-2020.
TSLA 2020 Stock Chart; Source
Now to the important part: how to find and profit from short squeezes
Finding stocks ripe for a short squeeze involves looking at short interest ratios and the stock’s float, or shares available to trade.
Stocks with a high percentage of their float sold short are prime candidates…
And that becomes particularly meaningful if an upcoming catalyst could drive the stock price higher.
Penny stocks present us with unique short-squeeze opportunities because of their very low prices and high volatility.
We look at the usual suspects, short interest and potential catalysts, but we also track trading volume for unusual activity.
Trading penny stocks, particularly in a short squeeze situation, can be very rewarding…
But I always urge caution with penny stock trading. It’s very risky because these low-priced stocks move extremely fast and can run away from you in the blink of an eye.
To learn more about penny stock trading, check out my comprehensive guide.
What tools can you use to spot a short squeeze?
I use financial news sources, stock analysis software and social media monitoring tools to hunt down short squeeze opportunities.
Here at StockstoTrade, we have all the tools you need for short-squeeze trading. I use them every single day.
BreakingNews Chat is our chatroom that is led by seasoned Wall Street veterans. It alerts you immediately to the catalysts I mentioned above that can move a stock quickly.
This forum has delivered several winners…
I posted an article on my blog a few weeks ago about just that.
StockstoTrade has an excellent in-house trading platform that uses real-time data. It’s the one I use.
Another tool is our proprietary AI system, XGPT, which uses aspects of human psychology to predict price movements.
Strategies for Trading During a Short Squeeze
Trading during a short squeeze can be hairy…You have to balance timely entry with risk management. Always set a stop-loss order to protect yourself on the downside.
To better understand risk tolerance and risk management, watch my video:
Short squeeze trading can be a little scary and it is risky but if you thoroughly educate yourself and arm yourself with the right tools, there are huge rewards to be had!
Speaking of educating yourself, be sure to register for my free live training webinar tonight at 9 pm Eastern to learn about my trading day, short squeezes, and all my other tips and tricks. I hope to see you there!
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade