Our hunt for breakout stocks has taken us to the S&P 500, where a number of large caps find themselves high on the list of potential short squeeze candidates.
Click to Enlarge Because where there’s short interest, there’s opportunity.
The February rally shook loose a few traders who were engaged in short selling. For example, total short interest on the S&P 500 companies dropped by 0.6% for the last two-week period, suggesting a slight decline in pessimism toward the market … but not much.
Total short interest for the S&P 500 companies still lies within the top 5% of readings over the last two years, telling us that the shorts remain persistent despite the market’s strong performance. To us, that’s nothing but bullish for the market, as it’s just another brick in the “wall of worry” that stocks so often like to climb.
The accompanying table displays the top 20 S&P 500 stocks with the potential for a short squeeze based on our approach of targeting technically strong companies with growing short interest. Any one of these makes for a good candidate, but let’s take a look at three particularly compelling short squeeze targets: