When short interest builds in a stock, it means traders are bearish. If it grows too fast, then too many traders are bearish. Throw in a little relative strength, and stocks can RUN to the upside. Every month gives us a new list of short squeeze candidates. Here are the top options for June on the Nasdaq and NYSE:
Here are the NYSE Candidates:
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Here’s the chart of USO, an oil ETF that moves close to the price of oil. It’s not suggested for a long term investment due to issues with contango and how the ETF is structured. But for a short term hedge against increased oil and gas costs, you can purchase it to help offset those costs. The charts big, just click on it to see the larger version. Let me know if that doesn’t work.
The way to figure out how much to buy, is to guess at what your increased cost will be. I can’t do that calculation for you, since you only know how much you drive and how much gas you use. For simplicity sake, say it’s $1000. Then look at the price of USO. To off set a $1000 increase in your gas costs, you have to make some assumptions. If oil goes through the roof here, back up to 150/barrel, the ETF will shoot up. Oil closed Thursday at 112. So from 112 to 150 is a 34% gain. With USO at 45ish, that same gain suggests it can go up to 60. For a profit of 15/share. $1000/15 = 67 shares.
But don’t forget, there’s a downside to hedging. If oil crashes, you will lose money on the investment.
67 shares at $45 is only $3000. To invest less than that, you can buy UCO, which moves at 2x the rate of movement in USO. So you can hedge the same amount with less initial outlay.
The monthly/weekly/daily chart is below. Let me know if you have any questions. If I made any mistakes in the math above, let me know. It’s early and I ran through it very quickly.
The answer is a simple yes, CSCO is a buy. But not just yet.
What’s happened with CSCO is that there has been so much negative news, that the short interest grew faster than almost any other stock in the market. That actually makes a stock ready to rise.
I won’t get into the mechanics, but simply put – when a stock with high short interest rallies, the shorts must cover, which creates more buying. This in turn results in higher stock prices.
But… The stock market is going through a correction right now. So regardless of the short interest, 8 out of 10 stocks will be heading lower.
So what’s a trader to do? Let CSCO bottom, let the correction play out – and buy CSCO on a break of a technical resistance level – and set your stop about 8% below that.
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Good Friday morning traders,
As the government prepares to shut down, oil and gold continue to rise, and the earth continues to shake, I thought I’d talk a little about the big picture.
For those of you who don’t know much about me, I am a professional trader and obviously own this financial advisory service. But what most don’t know is my back ground. I left a 22 year corporate career in finance with the longer term goal of eventually starting my own hedge fund.
It’s a long process and there is much to be learned. So as I continue with that process, I came across an individual that I found very interesting. His name is John Thomas. And honestly, I never heard of him before. Well, until now. He’s considered the founding father of international hedge fund trading and has advised some pretty impressive people over the years.
Here is a link to a video where he talks about hedge funds and how they approach certain issues. You can even gain access to his advice if you want. It’s worth a listen. In fact, it’s worth it to listen to it several times for educational purposes alone. I have and that’s why I am recommending it to you.
Click here to watch the video.
Enjoy your weekend.
TSLA Chart is very bullish here. Upside target 35 and a break of that, it could easily double. With higher oil prices, electric cars will continue to gain traction. This is the best play in the arena.
ENDP is a take out – with upside pricing around 51 and if it gets taken out, I’d guess around the 70′s. And the later they take to buy them out, the more they’ll have to pay. So we’ll see.
That being said, the rally is getting extended. A sell off is likely within a week.
click stock market timing to learn more.
The TSLA squeeze may be on!!!
Price Target 70!
ENDP – A stock we’ve been recommending in our ESA Service – has broken out and continues to run. Upside target 51!
Click here to learn more
If you’ve been following our posts here, we’ve been identifying a squeeze potential in TSLA – well, it paid off this morning as MS put a price target of $70 on it! Here’s the chart:
Here is a stock we like (MELI) and I’d consider buying incrementally as this stock advances.
One of the things we talked about in my class a couple weeks ago, was the feeling of shareholders when a stock is trading at new highs. When everyone who owns the stock has made money. It’s a good feeling and it’s usually reflected in the action of the stock.
Here’s one that’s in the process of breaking out. While it’s already moved significantly on a daily basis, it’s got plenty of room to move. So I’d consider building a position in it – as it continues higher. As my upward target is 97.
Let me know if you have trouble viewing the chart. This is one of my basic trading screens.
If you’re interested in taking my stock trading secrets course, we’re offering it at a discount for a limited time and you also get a copy of my day trading book as a bonus. Click here to learn more. The reason we’re offering it at such a greatly discounted price is that I’m looking for testimonials. So if you do sign up for it, please let me know your thoughts!
Just about to make another leg higher. If this gets some steam, it could last weeks.
Is there some news in the works?