Are you familiar with Friday short squeezes? It’s one of my favorite setups.
The best thing about Friday short squeezes is that you can often see ‘em coming. Sometimes days before they happen. The chart below shows what it looks like when a stock goes from looking dead, to being the short squeeze of the week.
THIS Friday Squeeze Catalyst Also Fuels “Money Mondays”
AIOK 10/30/26, Friday short squeeze
Table of Contents
The Big Picture
Last week, AI OKTO CORP. (NASDAQ: AIOK) set up beautifully for a Friday short squeeze.
Now, remember that AIOK was on my weekend watchlist going into Monday (Oct. 26). So, if you’re dialed-in, it didn’t come out of nowhere.
Look at what AIOK did from Monday to Wednesday (Oct. 26-28).
AIOK 10/26-30/26, 15-min candles
The Monday to Wednesday move went from the low $8s, to $33 per share. That’s massive upside for longs.
It also set the stock up for Thursday’s price action. This is exactly what we want to see for a Friday squeeze…
AIOK 10/26-30/26, 15-min candles, perfect setup for a Friday squeeze
AIOK was basically dead on Thursday with fading, weak price action all day. There were no spikes.
When a stock runs from $5 to $33 in a week, and looks like it’s done, who licks their chops in anticipation?
Predictable Short Sellers
Short sellers think the end is near. For them, AIOK had its run. They know the penny stock life cycle. So, when they see price action like that, this is how they think…
“It’s going back to $8. It’s all over. AIOK is going to tank.”
Which is why AIOK was my top squeeze idea going into Friday:
Source: StocksToTrade University – Capital Wave Trader
Now, you might be wondering…
“What’s Significant About Friday?”
Remember, if you short a stock, you’re paying fees and interest every day. That includes over the weekend.
So, if you’re short a stock on a Friday, and it starts spiking… you can get destroyed.
Not only are you in a losing position, but if you don’t cover then you pay additional fees and interest.
Worse, if the company drops a press release that spikes the stock on Monday morning, you risk blowing up your account. (More on why I call ‘em “Money Mondays” here.)
So, when AIOK gapped up into premarket trading on Friday, short sellers had no choice. They started buying to cover.
That, my friend, is a short squeeze. That’s the power of these stocks.
My Take
People ask me how I know what short sellers are thinking.
I was a short seller for 10 years, okay? If you short stocks for 10 years, you better know where they’re going to spike or you won’t be around very long.
What I love about short squeezes like AIOK is that you can be ready in advance. 16 hours before the squeeze, we knew the panic point and had a plan. If you followed the plan, it gave a 4.5-to-1 reward-to-risk. Not that I recommend it, but if you held longer, there was another $ 6-per-share upside from the target.
Watchlist
Since today is the election, and given yesterday’s bounce and selloff, let’s keep it simple. The Invesco QQQ Trust (NASDAQ: QQQ) chart below makes it clear just how much Wall Street hates uncertainty.
QQQ 6-month, daily candles, Oracle support, pivot point, and major resistance
Again, I don’t like to bring politics into trading, but I encourage you to go out and vote today. I believe it’s a civic duty.
The results of today’s election could determine whether Nasdaq pushes towards major resistance, or drops towards support. My friend, whatever you do, always make a plan and trade the plan
On My Radar
- Here’s a broad overview of how the midterms could affect stocks
- Names will never hurt me: OpenAI’s plan to beat data center politics
- What Trump’s sons, golf courses, and combat drones all have in common.