The Roaring Twenties are back to finish the week on Wall Street. Well, almost. While the market has danced its way higher, many of today’s most-shorted stocks remain a very mixed bag with investors. Let’s look at the price charts of three names helping with that quagmire and today, setting up as profit centers for both bulls and bears in the days ahead.
Heading into Friday’s closing bell and investors are rallying around nonfarm payrolls report that shows times are good. Or to be more fair, it’s a great time to be long the Dow Jones Industrials. It’s up 14% on the year and hitting record levels on the back of Nike (NYSE:NKE), Boeing (NYSE:BA), Caterpillar (NYSE:CAT) and a handful of other diversified large-caps.
On the other hand, feverish buying and record highs are nowhere to be found in most any of today’s most-shorted stocks. It’s been that way for a while of course, and it’s not entirely surprising. Ultimately, what drove those names into our collective consciousness out-the-gate in 2021, national nightly news reports and in many unwitting investors trading accounts, has come and gone.
What’s different today in the market’s most-shorted stocks is Reddit’s Wallstreetbets. As a group they’ve left a wake of destruction for other investors riding their coattails and not wise enough to recognize the action for what it was and will always be. And today that band of merry marauders is collectively eyeballs deep into silliness like crypto Dogecoin (CCC:DOGE-USD) or an over-the-top dislocation in Grayscale Ethereum Classic Trust (OTCMKTS:ETCG). Or at least they were. Poof!
There’s no judging here. The game that Reddit attracts isn’t unlike the one larger institutions play daily. The latter simply enjoy better PR and staying power. It simply is what it is. And today and without complicating matters, it’s simply time to trade some of the discarded from both sides of the coin.
Most-Shorted Stocks to Trade: FuboTV (FUBO)
Source: Charts by TradingView
The first of our most-shorted stocks to trade is FuboTV. FUBO maintains short interest of about 15%. It’s decent fuel, though world’s removed from earlier this year. Back in January bears in the live sports streaming platform took on more than 70% of Fubo’s float. And largely lost.
Today and more importantly than wagering on the other team helping with you win, FuboTV’s service has proven a big hit. As well, the company’s compelling growth story is poised to continue as it enters and expands its platform by offering subscribers sports betting from the comfort of their couch.
Technically, a Fibonacci-based two-step or mirror move pattern where leg AB matches leg CD has been fulfilled this past month. To be fair, the bullish low hasn’t stopped shares from moving marginally lower after a first attempt at bottoming. Still and often enough, second chance efforts prove to be the winning play. And with earnings on tap next week, this is one to watch for buying.
Triterras (TRIT)
Source: Charts by TradingView
The next of our most-shorted stocks to trade is Korean-based fintech Triterras. More importantly, it’s a company targeted for fraudulent and deceptive practices, which haven’t gone unnoticed by a formidable army of bears refusing to exit TRIT stock. Today, short interest stands at about 31% of the stock’s float. And in our estimation, if you can’t beat them, sometimes it’s better to join them.
Technically speaking, the price chart unequivocally agrees this one is a short. To finish off the trading week, a triangle formed beneath TRIT stock’s once-prized $10 level has broken down and put shares near their all-time-low of $5.86.
I’d look for new and aggressively lower levels in this most-shorted stock by purchasing an August $5 put with a 50% stop-loss tied to the bearish contract’s initial cost.
Most-Shorted Stocks to Trade: GoPro (GPRO)
Source: Charts by TradingView
The last of our most-shorted stocks to trade was, at one time, the market’s most vilified and heavily shorted. Nope, I’m not talking about GameStop (NYSE:GME). You have to go back a few years. I’m referring to mobile sports camera and drone outfit GoPro.
Today, the former tech upstart has matured into a company that’s turning the corner on profitability. It is enjoying high-end demand for its products and reached a milestone 1 million subscribers. It’s the stuff some thought would never happen after GPRO plummeted from 2014’s $98.47 to a crippling $2.
Shares are still fairly well-shorted at 12.50% of GPRO’s float. But following today’s decent earnings announcement and sporting a decent uptrend built over the past year, I’m looking for those bears to leave the playing field and for more bulls to suit up in the coming months.
With this most-shorted stock, or rather former bearish heavyweight, I’d suggest waiting for this week’s engulfing doji candlestick to be confirmed alongside a bullish stochastics crossover. Should that criteria be met, a July $13/$16 call vertical or a collar strategy, if you enjoy the long-game in GPRO, are favored ways to participate in the action.
On the date of publication, Chris Tyler holds, directly or indirectly, positions in GoPro (GPRO) and its derivatives, 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.
