When it comes to trading, especially low-priced stock trading, you’ve probably heard terms like the late-day squeeze, the Friday squeeze, or the low-float squeeze.
Basically, these are upward price movements caused by panicked short sellers trying to cover their positions.
Some sort of catalyst caused these shorts to rush in to cover their shares.
Whatever it was, positive news on the company, a surprise earnings win, etc., it usually creates a momentum-driven spike in the stock.
Check out my article to learn more about short squeezes.
These squeezes are great for those of us on the long side who have been waiting for this to happen.
In fact, that’s my job every Thursday evening — to find a short-squeeze candidate for my subscribers to trade on Friday.
Once I’ve found one, I publish my idea in my Weekly Squeeze Report along with my rationale, specific trading instructions, and a video.
I have to pat myself on the back for last Thursday’s squeeze idea. I chose Bright Minds Biosciences Inc. (NASDAQ: DRUG), and it played out perfectly on Friday.
By the way, my win rate for my Squeeze Report picks is 66%…not too shabby!
Now, you might understand what a short squeeze means, but you might still wonder, “What does this actually look like on a chart?”
That’s why today I chose to use DRUG as an example.
The Perfect Setup on Thursday
Today, I’m focusing on one of my favorite setups: the low-float Friday squeeze. We’ll look at DRUG, a stock that fits perfectly into this category.
The stock had an amazing spike last Tuesday and then took a breather, but it never faded. We keep an eye on these types of stocks because they’ve proven they can move.
Looking at its float, DRUG has a float of just 4.5 million shares. In the world of low-float stocks, anything under 10 million is low, and the lower, the better.
Why? Because with fewer shares available, the stock can rotate its float, and that’s when supply and demand really start to push the price up.
So that was everything I was seeing on Thursday night…
The Play on Friday
Here’s an excerpt of what I sent in the Weekly Squeeze Report:
Stock: Bright Minds Biosciences Inc (NASDAQ: DRUG)
Entry: $28
Target: $40s
Stop: $26.5
Friday Playbook:
If $DRUG opens weak tomorrow, look for red-to-green action. A dip that reclaims $28 will signal the start of the squeeze, offering a prime entry. From there, it’s all about momentum—if it moves, we ride. If not, we let it go.
With a history of rapid moves, hedge fund backing, and a volatile trading environment, $DRUG is shaping up to be one of the most exciting short squeeze setups of the week. As always, trade the levels, stay disciplined, and be ready to strike if the stock hits our entry point.
And then, on Friday morning, we got a red-to-green candle in pre-market.
After that, as I predicted, DRUG started to squeeze.
My instructions were to enter the stock once it traded at $28 per share. DRUG hit that price around 7:23 am Eastern.
It then ran to a high of $69. The chart shows how the volume started popping, which is the signature of a short squeeze. Anyone who shorted in the pre-market is now underwater. They have to cover, which creates buying pressure, which leads to a price and volume spike.
Now, let’s say you missed that initial move. The great thing about these setups is there’s often a second chance later in the day.
And sure enough, by around 3 p.m., DRUG spiked again from around $59 to $79.02.
Here’s everything that happened with DRUG on Friday:
DRUG Intraday, One-Minute Candles Chart; SteadyTrade
This is why I absolutely love Friday squeezes — they present multiple opportunities in one day, but you’re still out by the weekend.
By the way, if you want to take advantage of short squeezes like these, you need a great trading platform that features charting, technical indicators, stock screening, and more.
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And DRUG was still in play yesterday, trading at a low (premarket) of around $49 and peaking at $62.99.
So again, if you missed it either time on Friday, you could’ve caught the next leg up yesterday.
These plays happen over and over again because of one thing—panic buying from short-sellers. They have to cover because their downside is unlimited, which fuels these big moves.
My Final Thoughts…
Friday short squeezes are one of my favorite setups. It’s an exciting trade and I urge you to learn more about it so you can enjoy the thrill of the squeeze too!
I send my Weekly Squeeze Report every Thursday evening to my Daily Income Trader subscribers.
DIT members also get five daily webinars, including my Premarket Prep, access to our proprietary trading tools, including Oracle, our algorithmic system, and much more…
Find out how to join during our FREE presentation.
If you want to learn about my other trading strategies and access my multiple watchlists, consider joining my StocksToTrade Advisory service.
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Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade