The short squeeze is my favorite trading setup, and it makes up a large percentage of my profits overall. But when exactly is it best to utilize a short squeeze?
My general answer is when the market is at highs. But how do you choose which short interest squeeze to take?
Here is my best recipe for a short squeeze…
1) Find a ticker that’s within a stone’s throw of a new, all-time high.
2) Pay attention to the short float.
– The tickers I choose usually have at least 10% short float, but preferable 20% or more.
3) Identify if there’s a catalyst.
– There are often clues right before the kick-off of a squeeze. The catalyst can be anything — but the most predictable one is consolidation right near the highs that then breakouts, hits the new high, and causes short sellers to cover. Earnings is also a great catalyst (both the report and then run into earnings).
Five Star Trader Tip: Always keep up with the news! If there are any tickers that hit the news, or otherwise have additional momentum due to retail traders or attention, makes for the best short squeeze.
Here’s a list of tickers I’m currently keeping my eye on:
What are some of your favorite short squeeze tickers?