Today’s Most-Shorted Stocks to Trade

Everyone’s most talked about battleground stock has been back in play in a big way this week. Yup, GameStop (NYSE:GME). And for good reasons too. Right now though, the price charts of the following three most-shorted stocks have our attention as more actionable trading vehicles for the rest of us.

Source: Shutterstock

“Gamestonk!!” The market’s most badass short has been keeping the David-versus-Goliath crowd busy with its impressive volatility the past couple sessions. On Wednesday, GME was slammed by 34% and straight into the 76% retracement level of February’s lowly $38.50 print we all wish we bought to March’s “of course we took profits” high of $348.50.

The culprit? GameStop’s stock plunge was driven by an earnings disappointment, lack of details by management regarding its turnaround strategy and buzz of a possible capital raise. But apparently some bulls failed to receive or understand the meme stock’s bearish memo.

A day later, Wall Street’s most celebrated and despised heavily-shorted stock saw what’s become a storied band of merry retail traders from Reddit’s WallStreetBets forum and brokerage upstart Robinhood busy stealing GME stock back from the enriched and typically much larger bears. Shares of GameStop surged nearly 53% Thursday. Those traders weren’t alone either.

Data from Fidelity has revealed GME as the most actively traded stock by its retail customers. Moreover, buy decisions swamped sell orders by a margin of nearly 3-to-1. Peter Lynch must be rolling his eyes at the brokerage’s new breed of investor.

Enough about GameStop though. As much theater and ultra-volatile profits and suffering GME stock has distributed this week, today it’s some of the market’s other most-shorted stocks which offer opportunities that may stand the test of time or at a minimum, offer more than a day trading, meme-driven reality.

  • Riot Blockchain (NASDAQ:RIOT)
  • AMC Entertainment (NYSE:AMC)
  • SunPower (NASDAQ:SPWR)

Most-Shorted Stocks to Trade: Riot Blockchain (RIOT)

Riot Blockchain (RIOT) double bottom corrective base showing second pivot as just completing


Source: Charts by TradingView

The first of our most-shorted stocks to trade is Riot Blockchain. Some might take issue with the Bitcoin (CCC:BTC-USD) miner. It appears to have just over 14% of its float shorted. And to be fair, the short interest isn’t meme-worthy given what we’ve seen in 2021. Nevertheless, historically it’s a large percentage of bears betting against the company.

Today and if you’re a fan or upbeat about digital currencies, RIOT stock is also building a promising price pattern and actionable entry for bullish investors.

Technically, shares of RIOT have just confirmed a candlestick pivot within a higher-low variation of a double-bottom corrective base. From here and if the pattern rhymes with historical tendencies, a breakout to new highs should be in the offing over the next month to several weeks. For long exposure, I’d favor using a May out-of-the-money bull call spread.

AMC Entertainment (AMC)

AMC Entertainment (AMC) emerging uptrend now confirmed


Source: Charts by TradingView

The next of our most-shorted stocks to trade is AMC Entertainment. If investors desire to be where the cameras are stationed, this big screen cinema chain is only second fiddle to GameStop. And if you’re upbeat on the country’s reopening prospects and yearn for laughing or screaming in close contact with others, you might even make Peter Lynch proud with a buy order in AMC stock.

Technically, today’s price chart also suggests a decent entry point for bullish investors. Shares have just confirmed a higher-low pivot which sets up an emerging uptrend off this most-shorted stock’s late January into mid-February thrill ride.

Here and similar to RIOT, a May out-of-the-money call vertical looks to make sense off and on the price chart.

SunPower (SPWR)

SunPower (SPWR) building a quiet and strong corrective low


Source: Charts by TradingView

The last of our most-shorted stocks to trade is SunPower. I discussed this heavily-shorted stock just last week in InvestorPlace. And revisiting the name as a buy makes sense. Shares of SPWR are essentially flat on the week, so there’s no GME headlines or cameras flashing in this solar play’s direction. But that’s quite OK with us.

More important than fanfare, SPWR stock has continued to demonstrate relative and absolute strength compared to many tech stocks hammered by today’s anti-growth, risk-off mentality. Today, that technical rigor has also persisted in shaping a well-supported spot to pick up shares at a steep discount.

Following a larger correction of just more than 50%, this most-shorted stock is now finishing a fourth week of “mostly” inside pattern consolidation work. I’m anticipating SPWR will be moving off its pattern lows and firmly into the right side of a new bullish base in the coming weeks. Along with stochastics still backing a purchase, a strategy revision using the June $35/$45 bull call spread is a smart pre-emptive adjustment more strongly-aligned with our outlook.

On the date of publication, Chris Tyler holds, directly or indirectly, positions in Grayscale Bitcoin Trust (GBTC), but no other securities mentioned in this article.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100%  the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


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