The apes are back in a big way this week. But what about tomorrow, the day after that and God forbid, next month? Is it too late for other investors to catch a profitable ride in the market’s highest-profile, most-shorted stocks? Surprisingly, but selectively too, the answer as we’ll present in the following is an emphatic “No!”
It was supposed to be all about Jackson Hole. And for good reason. The annual economics symposium and its global influencers is a big event. Moreover, on occasion the conference can offer even larger thematic investment ideas based on what’s said behind those hallowed doors and on green fairways.
This week, the reality has proven a great deal different. Meme plays and the market’s most-shorted stocks have taken center stage led by spectacular, over-the-top gains in excess of 350% in shares of Support.com (NASDAQ:SPRT)
With a sprinkle of hindsight, one could insist the outsized stock theatrics is unsurprising given 2021’s influential uprising of swing-from-the-fences apes who frequent the less pomp-and-circumstance venue Reddit’s WallStreetBets forum.
One could also warn, based on year’s equally dramatic plunges in many of those most-shorted stock, that paybacks are a “you know what” for bulls that overstay their welcome. But not today or at least not here.
Today and fast approaching Friday’s closing bell, let’s look at a couple most-shorted stocks where investors other than apes can reside with confidence for more than a day or two based on the longer-term evidence off and on the price chart.
Most-Shorted Stocks to Buy: GameStop (GME)
Source: Charts by TradingView
The first of our most-shorted stocks to buy is video game retail play GameStop. GME stock, of course, is hardly a secret. Apes would hardly be where they are today without January’s insane rally in shares having jumpstarted this year’s meme-stock movement.
Today though and with the help of a successful short-squeeze cleaning up GME’s financials and forceful pivot into e-commerce under the leadership of Chewy.com (NYSE:CHWY) wunderkind of Ryan Cohen, GameStop is not the bearish, at-risk and most-shorted stock it once was.
Technically and right now, GME is also decidedly so much more in a good sort of way for bullish investors.
GameStop’s monthly chart reveals a bullish engulfing candlestick formed off price and Fibonacci support. With September’s trade commencing next week and stochastics favorably neutralized, nearby price and secondary confirmation shapes up as a big-time buy for this most-shorted stock.
AMC Entertainment (AMC)
Source: Charts by TradingView
AMC Entertainment is the next of our most-shorted stocks to buy. As with GME stock, AMC is a turnaround play made possible by the digits of today’s beloved and vilified ape population.
While the country’s largest cinema chain freely admits it’s “not out of the woods” following better-than-expected earnings earlier this month, the monthly price chart insists trusting the ability of AMC stock to act as a forward-pricing mechanism to the benefit of bullish investors.
Technically, shares of this most-shorted stock are successfully holding a key 62% retracement level and AMC’s 2016 all-time-high. That’s the good news.
The challenge right now is persistent, extreme volatility in AMC stock.
Today shares are poised to finish in a wide-range and volatile monthly doji pattern and a bearish stochastics setup in play. As much, I’d take the guesswork out of this decision candlestick and opt for buying this most-shorted stock if the secondary indicator can reaffirm momentum with a countering bullish signal.
Most-Shorted Stocks to Buy: Blackberry (BB)
Source: Charts by TradingView
The last of our most-shorted stocks to buy is Blackberry. Yup or at least for those of a certain age, the one-time mobile phone champ dethroned by Apple’s (NASDAQ:AAPL) iPhone is setting up for a nearby purchase.
Today, BB stock has long left its eponymously-named devices behind it. The company has pivoted into cloud-based software for cybersecurity, autonomous autos, Internet of Things (IoT) applications and other burgeoning markets aimed at restoring growth.
Blackberry’s story and like our other two most-shorted stocks remains a work in progress, but similarly a promising one. And here too, the monthly price chart is teasing investors with the idea a second chapter is possible.
Technically and after two monthly attempts at moving cleanly past its five-year highs, shares of BB have reset in a well-neutralized two-plus month corrective pullback.
At 7.5% short interest BB stock is least popular of today’s trio of buys. But as a more certain meme stock, the days for bears still residing in Blackberry appear increasingly numbered.
Come September, investors should be on the lookout for bullish pattern confirmation of August’s rather tight-looking doji candlestick. Then remember to place a buy order with your broker on your iPhone to go long this “kinda sorta” most-shorted stock.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
