The S&P 500 and other indices are trading at new all-time highs, and yet the shorts are alive and well. Of course, that’s great news for those of us looking to take advantage of potential short squeeze situations to ride stocks even higher.
Click to Enlarge Short sellers appear split on where the market might see some weakness over the next few weeks. For example, short interest on the SPDR S&P 500 ETF (SPY) saw an increase of 5% over the last two-week reporting period, while the technology and small-cap sectors of the market saw declines in short interest of 5% or more — likely due to recent short covering as these sectors have been relative strength leaders.
The table below identifies the top 20 short squeeze candidates from our proprietary system, which looks for companies and ETFs that are technically strong and also have short interest that is rising from already relatively high levels.
Historically, this “signature” is indicative of companies that are likely to squeeze short sellers out of their bearish bets, driving prices higher as these bears are forced to cover their shorts.