Earnings Breakout: BOBE

BOBE broke out today over long term resistance levels in a reaction to a postivie earnings announcement today. It is also worth noting that this stock has a high short interest ratio.

This is a good example of an earnings breakout candidate.

Short Squeeze Play: SRDX

SRDX, a drug stock, broke out over price and moving average resistance on huge volume today. While that's fine and dandy, what's really interesting is that it has a 30 percent short interest ratio. To put this number in perspective, breakout stocks make my short squeeze setup if the ratio is 10 percent or higher. Of the 125 stocks that were on my 3 percent +20 breakout scan, only two stocks came in above 20 percent short.

Do ya think the shorts that came home from a hard day of work and checked there portfolios this evening are panicking? I wouldn't be surprised to see more upside here. A stock that print a huge gap always worries me (since the gap point is so far way), so if I do enter I will use a tight stop just under today's price action, probably in the $42-43 range.

Today's Trade: NILE

I bought 400 shares of NILE at $58.45. The stock made it to my "low float high short interest breakout" watchlist yesterday (also discussed in the video webcast). My stop will be in the around $56 range.

Short Float Breakout Watchlist w/ Video Webcast

In today's video, I go over the Short Float Breakout Watchlist. Elements that make up the setup include:

A. Short Interest High
B. Float Low
C. Breakout
D. Over Resistance

On the Watchlist for Monday: CHFC, NILE, BAMM, ULTI, ZOLT and LIFC



http://one.revver.com/watch/304473/flv/affiliate/93676

Video: Breakout-Pullback Watchlist For Wednesday

In today's video, I go over how I scan for breakout-pullback candidates.

Video Summary:
Only 16 stocks made it on the scan, which looks for 3 percent breakouts that are over $20. This is a very low number and makes me cautious about the market in general. Stocks that made the watchlist:

COG, NMX, ITG, MGLN, MFRI, IOC, CMED



http://one.revver.com/watch/299923/flv/affiliate/93676

ILMN Revisited and a Video Question

Two nights ago, I mentioned ILMN as a "short float" breakout candidate. The stock had broke out over resistance and had a low float coupled with high short interest. These conditions lead me to believe we could be setting up for a parabolic move higher. Take a look at how it's stock has performed over the past two days.

The stock is consolidating it's breakout, but has not fallen with the market. Considering the carnage over the past two days, that's quite admirably. I wouldn't be surprised if it makes a big move in the coming week.

I have a "mental buy stop" placed just above the 200 day moving average.

Video Question:
I would like to start posting video of my daily chart and watchlist reviews, but I don't know where to begin. Is it as simple as pointing a webcam towards the computer screen, or is there some type of software I should use? Any help would be appreciated. Please leave a comment or email me at SinghJD1@aol.com with any suggestions. Thanks.

"Short Float" Breakout Setup: ILMN

ILMN made a 4 % gain today over established resistance. However, that's not what put it on my watchlist. Stocks in a downtrend do not usually make the cut. What makes this stock special is that it is a low float stock with a high short interest ratio.

The stock's float is a little over 5 million. To put this in perspective, AMZN and HTZ both have over 30 million floats. What this tells you is, if there is strong buying interest, it will be easy for ILMN to make a parabolic move.

The short interest ratio is 12.6 percent. That puts it's short interest in top 10 percent of today's top 40 breakout stocks. Not bad. If there is buying interest and price starts to move up, there is a good probability that we will see some short covering. This could make what would have been a small gain after the breakout into a parabolic move.

Ideally, I like to use this setup for stocks that are not in a downtrend. For example, take a look at IOC. This one was a perfect setup, but now is a little too far from it's breakout point. However, it works for stocks that are reversing from downtrends as well, you just must play it more cautiously.

To sum it up, here is what I like about ILMN:

A. Short Interest High
B. Float Low
C. Breakout
D. Over Resistance

Note that their are a few resistance points to cross, with the 200 day moving average at $35.81 and the gap down at 38-40. I will not enter unless the 200 day moving average is crossed, or we get a low volume pullback to the breakout point. In either case, I will use a tight stop upon entry. I tend to play it "tighter" when a stock is trying to break a downtrend.