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3 Stocks Building Toward a Big Short Squeeze

CERN, PRGO among a couple plays that could pop

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Short sellers are starting to get aggressive as we enter the final month of the year. For the last two-week reporting period, short interest on S&P 500 companies rose by 2.8% — its highest levels in more than a year. We view that as a perfect opportunity to pick up a few short squeeze candidates.

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The addition of shorts shouldn’t be a surprise. Analysts, pundits … everyone has been increasingly nervous of a potential snap to the market’s breakneck rise.

While it shouldn’t be a surprise to see some weakness during the short-term, the increase in short interest suggests that any market decline — such as the current one — is likely to be a short and fast corrective move. After all, traders are already factoring a decline into stocks, via the short sales activity.

This means traders and investors looking for an opportunity to grab up some bargains on a decline need to prepare their short squeeze buying lists right now. That’s because any correction likely will be met with buying soon thereafter, as sidelined traders try to squeeze a lot of cash into a short-lived window of opportunity.

The above table shows a number of short squeeze opportunities that are likely to lead the market higher. Here’s a closer look at three:

Article printed from InvestorPlace Media, http://investorplace.com/2013/12/short-squeeze-stocks-to-buy/.

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