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.

Click to Enlarge 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:

Short Squeeze Candidate #1: Cerner (CERN)

Click to Enlarge Healthcare has been in the air lately with the implementation of the Affordable Care Act. The uncertainty surrounding the changes in legislation has traders betting against a number of companies, including Cerner (CERN).

Despite trading near all-time highs, short sellers have been hammering this healthcare information systems company. Current short interest for CERN stock stands at 22 times its average daily volume, setting up a nice short squeeze possibility.

Expect to see the shorts’ resolve start to break as CERN stock cracks the $60 level, sparking a short squeeze.

Short Squeeze Candidate #2: Perrigo (PRGO)

Click to Enlarge Another classic setup for a short squeeze is the activity that we’re seeing in Perrigo (PRGO).

PRGO stock is trading more than 50% higher for the year, which has the shorts screaming for a top. Perrigo has spent some time consolidating at the $155 level, which caused the shorts to take notice and add even more bearish bets. The 17% increase in short interest is a great indication that a short squeeze is pending, which will help PRGO stock break out of its recent consolidation.

In addition, Perrigo has some potential support building below as the 20-day moving average is sneaking up to the $155 level. The potential for support from the technicals and a break above $160 will likely be enough to get the shorts to scramble and turn into buyers to cover their positions, helping a new rally in PRGO stock.

Short Squeeze Candidate #3: Teradyne (TER)

Click to Enlarge Technology shares have been seeing some shorts lately as traders are betting on a fade in the trend of technology leadership. Among the names on our short list for squeezes is Teradyne (TER).

This semiconductor equipment provider is benefiting from stronger demand for chips in a myriad of electronic devices — the same fundamentals that have Intel (INTC) on our short list of technology names to buy.

TER stock recently consolidated at the $17 as three technical trendlines — the 20-, 50- and 200-day moving averages — are all settling in around $17. Teradyne is likely to benefit from the confluence of support from the technicals and use $17 as a launching pad for another rally. That would trigger a short squeeze and add to the buying power for TER.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.