VERB is entering potential short squeeze territory
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Posted On: 06/27/2023 11:14:28 AM
VERB is entering potential short squeeze territory.
"Introduction To Short Squeezes
A short squeeze is a very profitable setup if your entry and exits are timed correctly. But, the key to getting in on the ground floor of a short squeeze is to spot it before it happens. You need to be ready to take advantage of the situation as soon as a bullish catalyst sets off the squeeze .
What is a Short Squeeze?
A short squeeze occurs because short sellers get skittish when it looks like their short bets may prove wrong. Short sellers face unlimited risk if they turn out to be wrong and a stock’s price rises. Not only that, but short sellers will also start getting margin calls from their brokers as their short goes bad.
The easiest way for short sellers to cut their losses and answer their margin call is to simply close their trade. In a short, that means buying back the stock to cover the shares they borrowed and sold.
But, sometimes there simply aren’t enough shares to go around for all the short sellers who want to buy back the stock. That drives up demand, which in turn creates a lot of buying pressure and a sudden jump in the price of a stock. This creates something of a snowball effect – short sellers buy up the stock and drive up its price, thus forcing other short sellers to do the same thing to limit their own losses. A short squeeze can turn what might have started as a gain of several percent into a gain of 10% or more in a single day.
Identifying Short Squeeze Setups
So, how do you identify potential short squeeze setups?
It starts with finding stocks that have a lot of shares being shorted . The number of shares short can be measured directly, but it’s also helpful to think of it as a fraction of the average daily volume of shares being traded. For example, if a stock has 100,000 shares short, but only an average of 20,000 shares traded per day, it would theoretically take short sellers five days to cover all of the short positions.
This is important because the higher the ratio of short shares to shares typically traded, the higher the demand for the stock will be among short sellers once the price starts rising. Typically, you’ll want to look for stocks where the number of shares short is at least five times the average daily volume . Ideally, the number of shares short should also make up a significant fraction of all the available shares – 10% or more .
The other thing to consider is whether the number of shares being shorted is increasing or decreasing. If shorts are being covered before a squeeze develops, the situation can defuse itself without a sudden spike in demand. If the number of shorts is continuing to increase even as it would take five days or more to cover all of the short positions, that’s a good sign that a short squeeze may be looming .
The number of shares short should be greater than five times the average daily volume
The shares short as a percentage of the float should be greater than 10%
The number of shares short should be increasing "
How to Scan for Short Squeezes
"The number of shares short should be greater than five times the average daily volume " Days to cover > 7
"The shares short as a percentage of the float should be greater than 10% " Short % > 9%
"The number of shares short should be increasing " On 5-15-2023 = 0.29M, on 5-31-2023 = 0.33M (13.7% increase)
VERB Short Interest
All we need now is a bullish catalyst to set off the squeeze. I think that will happen sooner than most think.
"Introduction To Short Squeezes
A short squeeze is a very profitable setup if your entry and exits are timed correctly. But, the key to getting in on the ground floor of a short squeeze is to spot it before it happens. You need to be ready to take advantage of the situation as soon as a bullish catalyst sets off the squeeze .
What is a Short Squeeze?
A short squeeze occurs because short sellers get skittish when it looks like their short bets may prove wrong. Short sellers face unlimited risk if they turn out to be wrong and a stock’s price rises. Not only that, but short sellers will also start getting margin calls from their brokers as their short goes bad.
The easiest way for short sellers to cut their losses and answer their margin call is to simply close their trade. In a short, that means buying back the stock to cover the shares they borrowed and sold.
But, sometimes there simply aren’t enough shares to go around for all the short sellers who want to buy back the stock. That drives up demand, which in turn creates a lot of buying pressure and a sudden jump in the price of a stock. This creates something of a snowball effect – short sellers buy up the stock and drive up its price, thus forcing other short sellers to do the same thing to limit their own losses. A short squeeze can turn what might have started as a gain of several percent into a gain of 10% or more in a single day.
Identifying Short Squeeze Setups
So, how do you identify potential short squeeze setups?
It starts with finding stocks that have a lot of shares being shorted . The number of shares short can be measured directly, but it’s also helpful to think of it as a fraction of the average daily volume of shares being traded. For example, if a stock has 100,000 shares short, but only an average of 20,000 shares traded per day, it would theoretically take short sellers five days to cover all of the short positions.
This is important because the higher the ratio of short shares to shares typically traded, the higher the demand for the stock will be among short sellers once the price starts rising. Typically, you’ll want to look for stocks where the number of shares short is at least five times the average daily volume . Ideally, the number of shares short should also make up a significant fraction of all the available shares – 10% or more .
The other thing to consider is whether the number of shares being shorted is increasing or decreasing. If shorts are being covered before a squeeze develops, the situation can defuse itself without a sudden spike in demand. If the number of shorts is continuing to increase even as it would take five days or more to cover all of the short positions, that’s a good sign that a short squeeze may be looming .
The number of shares short should be greater than five times the average daily volume
The shares short as a percentage of the float should be greater than 10%
The number of shares short should be increasing "
How to Scan for Short Squeezes
"The number of shares short should be greater than five times the average daily volume " Days to cover > 7
"The shares short as a percentage of the float should be greater than 10% " Short % > 9%
"The number of shares short should be increasing " On 5-15-2023 = 0.29M, on 5-31-2023 = 0.33M (13.7% increase)
VERB Short Interest
All we need now is a bullish catalyst to set off the squeeze. I think that will happen sooner than most think.
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