Today, I want to dig into one of the most exciting topics in trading…
Short squeezes!
Short squeezes are hands down some of my favorite trade opportunities out there.
To learn the basics of a short squeeze, check out my article.
Okay, maybe it’s my evil side coming out…
I love watching short sellers squirm and then profiting from their panic!
All joking aside, whether you’re trading with a big account or just starting with a small one, these are the plays that can really make an impact.
Why?
Because nothing moves a stock 100%, 500%, and sometimes even in the 1,000%s, like a short squeeze.
Shorts covering their positions act as an accelerant, like gasoline on a fire….
It’s chaos for them, but it’s an opportunity for us.
Table of Contents
What Makes a Great Short Squeeze?
The key factors are pretty simple, but incredibly powerful.
A lower float makes a better setup:
The float is the supply of shares available to trade. It’s the maximum amount available for buyers like you and me.
Why do we care about low float stocks?
This is Economics 101. When supply is low and demand is high, prices skyrocket.
Read my blog post to learn more about float right here.
For short squeezes, we’re looking at stocks with less than 10 million shares in the float. The lower, the better.
Multi-Day Moves:
Remember this: you don’t have to nail the big move on day one.
In fact, I’d argue that many short squeezes create the best opportunities on day two, day three, or even day four.
Why?
When shorts get squeezed over multiple days, you’ll see the parabolic moves.
Stop thinking you need to catch the gapper. Instead, focus on the multi-day runners where the real fireworks happen.
A Catalyst Drives the Move:
Short squeezes need a spark, and that’s where a news catalyst comes in.
News, no matter how suspect (i.e., a press release put out by the company about a vague contract), gets traders excited. That brings in volume and creates the setup we’re looking for.
How to Find Short Squeezes
So how do you spot these plays without wasting time?
The easiest way is to use a low-float scan.
How do you access a scan like that?
On our StocksToTrade platform, we’ve got one built right in…
Plus, you can find custom scans I’ve designed to highlight the best multi-day short squeezes, float rotators, and unusual volume movers.
StocksToTrade also includes real-time data, charting, technical indicators, news, and more.
And right now, you can get two weeks of both the STT platform and our Breaking News Chat service for $17.
Grab your 14-day StocksToTrade + Breaking News Chat trial today for only $17!
A Recent Short Squeeze Example
Here’s one I nailed just last week…
Last Thursday after market hours, Allurion Technologies released news about one of its products…Remember, we’re looking for news catalysts, no matter how dubious.
Like clockwork, the shorts panicked, and by Friday morning, we had a fantastic short squeeze on our hands.
ALUR Intraday, 5-Minute Candles Chart; SteadyTrade
Every Thursday evening I send out a Weekly Squeeze Report to my Trader’s Unlimited members.
It gives trade instructions for a short-squeeze opportunity I see coming the next day.
Here’s an excerpt:
The report also includes a detailed analysis of my rationale for choosing that stock and a video.
ALUR stock spiked to a high of $20.26 per share on Friday. Anyone who got in at $7 saw a a return of 189%*!
My Final Thoughts
Short squeezes are some of the most powerful, repeatable setups in the market, but the key is to have the right tools and stay disciplined.
Look for low-float stocks with a catalyst, focus on multi-day moves, and stick to a plan.
And if you want access to my Weekly Squeeze Report, check out my new Trader’s Unlimited plan.
It includes that and all of my other products in one place…
Oracle, my IRIS Analytics AI swing trading system, StocksToTrade Advisory, and the Daily Income Trader System.
Buying each one of these separately costs $139,857, but imagine if you could get all of this in one package for a fraction of that price? And no renewal fees!
There’s some bonus stuff in there too but I’ll let you see for yourself…
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Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade