Wall Street is having a moment of sorts. But today’s reimagined Roaring ’20s has nothing on many of the market’s most-shorted stocks trading at 52-week lows and beyond.
Let’s take a look at the price charts of three of these heavily shorted stocks, then determine if there’s room for further grilling or if a well-done situation is now ripe for buying.
What just happened? As that relates to the new trading year and index investors, who up until January had been enjoying abnormally strong and record breaking asset prices, it’s officially called a market correction.
With just one week until 2022’s first monthly 401(k) statements are processed, the broad-based, large-cap S&P 500 is off 6.50%, and the bulk of the damage happening over the current five-day period.
But while Covid-19, inflation jitters or worries over the Fed’s punch bowl being yanked away are adversely impacting Microsoft (NASDAQ:MSFT), Costco (NASDAQ:COST), Tesla (NASDAQ:TSLA) and others, the bear narrative has been alive and well in the market’s most-shorted stocks.
Is now the time for the bulls to make some hay of their own? Or is it better to recognize a “when in Rome” situation and join the bears? These three most-shorted stocks price charts insist bulls and bears can still make money, but pigs get slaughtered.
Most-Shorted Stocks to Trade: Beyond Meat (BYND)
Source: Charts by TradingView
The first of our most-shorted stocks to trade is Beyond Meat. And BYND stock is a bearish short.
The plant-based meat upstart currently maintains short-interest of 36%. And notwithstanding the occasional short squeeze, bears have been in control of the action.
This most-shorted stock shed nearly 50% off its valuation in 2021.
With BYND’s price action confirming a large and bearish head and shoulders topping pattern in the fourth quarter, a conservative measured move warns of still significant downside and all-time-lows ahead.
Today, and with shares back inside a flag pattern that’s tripped up both bears and bulls, a bearish second chance opportunity in this most-shorted stock exists if weekly stochastics signals a bearish crossover.
Blink Charging (BLNK)
Source: Charts by TradingView
The next of our most-shorted stocks to trade are shares of EV charging station play Blink Charging.
Short interest in BLNK stock hoovers around 38%.
Over the past year, bears that stayed the course in this most-shorted stock have enjoyed big-time profits. Shares are off by roughly 67% since hitting a peak valuation one year ago.
Those gains however didn’t come easily. It’s been a volatile ride in BLNK shares.
The price action shown on the weekly chart in Blink Charging fully supports this most-shorted stock as a very tradable vehicle for bears and bulls.
And today, with a weekly doji forming just beneath triple bottom and 62% support and the pattern backed by an oversold stochastics pattern, bulls could be readying for a test drive higher in shares.
Wait for a bullish crossover from the secondary indicator and price confirmation from the weekly chart.
Should those conditions be met, a shorter-term long call strategy in lieu of owning this most-shorted stock offers investors an approachable risk-to-reward trade-off.
Most-Shorted Stocks to Trade: Allbirds (BIRD)
Source: Charts by TradingView
The last of our most-shorted stocks to trade is sustainable and trendy apparel company Allbirds.
A recent IPO, BIRD stock has quickly turned into a meal for bears. Since peaking at $32.44 during its November debut, shares have tumbled 59%.
Short interest in this most-shorted stock has also ballooned to nearly 60% of Allbirds’ float.
But it could be time for BIRD to take flight.
Technically, shares of this most-shorted stock may be putting together a lifetime triple bottoming pattern.
Following a failed double attempt, today’s undercut triple variation set against BIRD’s lifetime downtrend line has our attention as a buy.
Given a less-than-supportive daily stochastics, but one which could change quickly, wait for this most-shorted stock to rally above $13.60 and through pattern resistance to have a stronger chance at flipping the bird to this stock’s bears.
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.
