Biweekly short interest info is among the richest of data paydirt when it comes to finding short-term trading opportunities.
One of the reasons for this is the myriad ways we can dissect the data to find opportunities in short covering rallies. Normally, we would spend this space talking about the traditional high short interest ratio trades — an effective means to gauge short squeeze opportunities — but given the market conditions, we thought another method made sense right now.
Current short interest data shows that the bears have been resolute in their stances, despite the market’s melt-up. So instead, we’re looking at the companies that saw the largest changes in their respective short interest ratios this week. The idea is simple: Isolate companies that saw a large increase in their short interest ratio this period, as that should identify companies the shorts are “doubling down” on — increasing the chances for a short covering rally.
The table below displays 13 companies that saw a significant increase in their short interest ratios during the past reporting period. All stocks trade above $10 and have more than 10 analysts covering them, to help identify liquid trade opportunities.
Here are three we’re honing in on:
Click to Enlarge Breaching new all-time high prices hasn’t affected short sellers’ stance on Tripadvisor (NASDAQ:TRIP). The stock’s interest ratio spiked 35% higher, according to the latest data, as short sellers added to their already lagging positions.
The travel portal has been strong on the earnings front, beating analyst expectations by an average of more than 5% for the past year. And technically, TRIP shares are trading strongly, outpacing the S&P 500. However, they’re garnering no attention from the analyst community, which still has 65% of their recommendations in the hold or sell category, stressing the “underloved” status of the company.
Watch for the analysts to start playing offense with TRIP shares — and watch for the shorts to start retreating — helping the stock to break toward the $60 level.
Click to Enlarge Shares of restaurant supplier Sysco (NYSE:SYY) have been headed north as the company benefits from improvements in the consumer’s spending habits. However, despite this more aggressive spending, the shorts have been increasing their losing positions.
SYY currently is consolidating just below the $35 level. From the looks of the charts, a break above the $35 will get the shorts running to cover their losing positions.
Click to Enlarge Auto manufacturers have been in the driver’s seat (sorry for the pun) lately as signs of profitability are driving interest and prices higher. Short interest on General Motors (NYSE:GM) has spent the past few months moving lower as the shorts were forced out of their positions. Now, however, we’re seeing a revival of short selling despite the fact that GM appears ready to break above $32.
We’re looking at the recent pullback to the stock’s 20-day moving average, currently at $31.62, as a healthy consolidation that should be followed by another leg higher in the GM rally. We like the opportunity to jump into the shares around $30.50 for a ride to $33 over the short term.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.