This is a good example of an earnings breakout candidate.
Showing posts with label short squeeze. Show all posts
Showing posts with label short squeeze. Show all posts
Wednesday, June 04, 2008
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.
This is a good example of an earnings breakout candidate.
Tuesday, March 25, 2008
The Frustration of Waiting for a Pullback
One of the most frustrating things about the breakout-pullback setup is when you've got a textbook breakout out of a base, the stock heads your watchlist, and instead of pulling back to any measure of support the stock keeps going and going.
Last Thursday KEX's breakout put it at the top of my watchlist. I loved the setup. We had a breakout on high volume out of a base that mounted powerfully through resistance.
My dilemma at the time was to buy two points away from support, at around $52, or wait for a pullback to $50. I decided to wait. Three days later the stock is at $56.76.
I am not sure what is more frustrating, missing a move that does not pullback or buying a breakout and waiting forever as it consolidates its gain. Experience has lead me to a few theories on the conditions that lead to each of these outcomes, and I've spent the better part of my free time the past month researching hundreds breakouts, in both bull and bear markets, going back 8 years.
My research is not complete, but there are a few factors that seem to indicate a move sans pullback. One factor goes completely against conventional wisdom.
Last Thursday KEX's breakout put it at the top of my watchlist. I loved the setup. We had a breakout on high volume out of a base that mounted powerfully through resistance.
My dilemma at the time was to buy two points away from support, at around $52, or wait for a pullback to $50. I decided to wait. Three days later the stock is at $56.76.
I am not sure what is more frustrating, missing a move that does not pullback or buying a breakout and waiting forever as it consolidates its gain. Experience has lead me to a few theories on the conditions that lead to each of these outcomes, and I've spent the better part of my free time the past month researching hundreds breakouts, in both bull and bear markets, going back 8 years.
My research is not complete, but there are a few factors that seem to indicate a move sans pullback. One factor goes completely against conventional wisdom.
Wednesday, March 12, 2008
Today's Trade: MON
I took a small short position in MON today, shorting 150 shares at $108.53. As noted in my previous posts, distribution has taken over ag related sectors and MON is taking the lead in this phase.
I have yet to see a strong price move coupled with strong volume, which leads me to believe yesterday's bounce was due to short covering. I may have entered a bit early, since we are still a few points away from moving average resistance. However, I do not want to miss the next leg down.
I have yet to see a strong price move coupled with strong volume, which leads me to believe yesterday's bounce was due to short covering. I may have entered a bit early, since we are still a few points away from moving average resistance. However, I do not want to miss the next leg down.
Thursday, June 28, 2007
Today's Trade: SRDX
I bought 500 shares of SRDX at 45.54 (I noted this in the comments of my last post, but didn't get to post it here).
As I stated last night, SRDX was setup as a short squeeze play:
The stock opened at $44.57 and closed at 49.28. I would have loved to catch the open price, but as a part-time trader I can't always be at the screen, and I didn't want to put a buy stop in without being able to monitor the entry closely.
At the moment, I'm looking at a $2350 gain. I thought about exiting at $50 (the high was $50.98), but I decided against it. These types of short squeeze plays can net some explosive gains over multiple days. I'm going to chance that the shorts will continue to hit the "cover button" tomorrow. I probably will sell into any major spikes above $51.
As I stated last night, SRDX was setup as a short squeeze play:
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.
The stock opened at $44.57 and closed at 49.28. I would have loved to catch the open price, but as a part-time trader I can't always be at the screen, and I didn't want to put a buy stop in without being able to monitor the entry closely.
At the moment, I'm looking at a $2350 gain. I thought about exiting at $50 (the high was $50.98), but I decided against it. These types of short squeeze plays can net some explosive gains over multiple days. I'm going to chance that the shorts will continue to hit the "cover button" tomorrow. I probably will sell into any major spikes above $51.
Wednesday, June 27, 2007
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.
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.
Monday, June 18, 2007
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
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
Wednesday, June 06, 2007
"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.
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.
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