The stocks below have a very high short interest – over 20% of their float is short. They are close to their 52-week highs and have built a small base, which might turn into a launching pad for higher prices. Short sellers always sound smart, but they are often early and become victims to a short-squeeze – a process that rapidly rising prices that forces short-sellers to cover their bets, which adds more fuel to the upside momentum.
59 stocks priced above $5 currently have over 30% of their float short. Four of them are setting up for a potential breakout.
A breakout in highly shorted names often leads to a squeeze as short sellers are forced to cover their positions. It is not unusual to see a 20-30%, even 50% one-week move in a highly shorted name, especially when its float is relatively small (under 25 million shares).
Here’s a weekly and a daily perspective of the four stocks.
I haven’t done due diligence on any of those names. The only things they have in common is a constructive weekly chart and a decent risk/reward setup. They are within 10% of their 52-week highs and they have outperformed the S&P 500 in the past six months.