Editorial

Short Squeeze Updates

 

If you read my email last week… you now know all about the short squeeze.

If you didn’t, you can check it out here.

So why is it worth your time to learn about the squeeze?

Well, getting caught on the wrong side of a short squeeze can be a “blow your whole account out” moment.

You see, there are always traders betting against stocks — the shorts… and when a stock just moves a little higher, they’ll be forced to cover and drive demand through the roof!

That ultimately leaves shorts scrambling to get out and taking offers for much higher than they anticipated…

And if you know how to play the long side… cha-ching!

All of the covering by shorts creates a demand that can not be matched… and this creates the most powerful move you will ever see in the market

And the sweet deal for you, I am always watching stocks that have the potential of getting caught up in a squeeze, and today I am going to share those stocks with you… as well as recap the stocks I shared last week…

Here are the top short squeeze candidates that I am watching this week…

 

Stocks I’m Watching

 

As you know by now, when I look for stocks with the potential of a short squeeze, I am looking at specific market forces that when put together are exactly what can create the power to push a stock into an unstoppable surge in price…

I am looking at how concentrated the short interest in a stock is, as well as, the recent price action of the stock.

These together have the power to set it off.
 

 

Navidea Biopharmaceuticals, Inc. (NAVB)

 

Navidea (NAVB), as a leader in precision medicine, uses patented technology working to develop next-generation targeted diagnostics and therapies for cancer, autoimmune conditions, and other inflammatory diseases.

Concentration of Short Interest:

  • Short Ratio (days to cover)   —    7.8
  • Short Percent of Float  —   5.63%

While the concentration of short interest isn’t as high as the stocks we looked at last week, it is within the range of interest.

Recent Price Action:

 

 

Looking at the chart, NAVB broke out of a consolidation pattern in September…

From there, it made a 50% move up and pulled back to the breakout level, holding as support.

The next move up showed the power of a short squeeze with a gap up and move to a high that was around 130% higher than the support level.

The shorts obviously came in and won the battle, as the stock is trading back in it’s new consolidation range since the breakout.

What I like about this chart is the big move after breaking out of consolidation in September.

And the volume on the gap up day, which showed a squeeze was on… but failed… it does however show the potential once the stock catches another piece of news.

I am watching NAVB to see how it fares when it gets back down to the new support level at .50-.60… this is where I would need to see it hold and get back into consolidation mode while we wait for a new buy pattern to form.

With a new Buy pattern we could be in the stock before the next piece of news surfaces that puts the squeeze on… but if it doesn’t hold support, all bets are off…

Catalyst Potential:

When NAVB made the gap up squeeze on Oct. 31 there was news out about positive results from one of its targeted diagnostics measures… However, the company was also reporting earnings Nov. 7 and clearly investors weren’t going to be on board yet… so the stock rolled its way back down into earnings and that’s where we sit now…

If it sets up with a buy, we could be seeing interest and the next piece of news could be around the corner… and you see investors are clamoring for the right announcement to set it off.

 

Novavax, Inc. (NVAX)


From the website: Novavax, Inc. is a clinical-stage biotechnology company committed to delivering novel products to prevent a broad range of infectious diseases. Using innovative proprietary recombinant nanoparticle vaccine technology, we produce vaccine candidates to efficiently and effectively respond to both known and emerging disease threats.

Concentration of Short Interest:

  • Short Ratio (days to cover)   —    5.3
  • Short Percent of Float  —   20%

Recent Price Action:

 

 

Looking at the chart of NVAX, we’ve seen some recent moves to the $8 range.

However at the moment it has come back to earth and is consolidating in the same range it was in before those two massive moves up…

What I like about this chart is the bottoming formation over the past month coming out of the downtrend… and at this current price you can see it’s is pushing up against a resistance level…

If the stock catches a bid and breaks resistance there, it could make a nice pop. I will watch NVAX a little tighter than NAVB as it is much closer to a Buy setup at the moment, but anything can change.

For real “squeeze” potential, I would like to see it break above the low 5’s as there are a couple points on the chart that area comes into play…

Catalyst Potential:

NVAX expects results from the company’s late stage clinical trial of a seasonal flu vaccine called NanoFlu… The results are expected in the first quarter of 2020.

The company is obviously optimistic, but the data will be the key… This is huge for NVAX as it would be their first product to take to market… and you can imagine what the stock will do to the shorts if the data comes out positive…

Last Week’s Recap: see the original write up here


Ziopharm Oncology Inc. (ZIOP)

Concentration of Short Interest:

  • Short Ratio (days to cover)   —    27.8
  • Short Percent of Float  —   32%

Recent Price Action:

 


What I liked about this chart was the bottoming formation over the past month coming out of the downtrend… and it was pushing at a resistance level…

The box on the chart shows how it has traded since then and clearly it is in the same area… I do like that it has continued to consolidate and press resistance, so it is still on the radar.

 

VirnetX Holding Corp (VHC)


Concentration of Short Interest:

  • Short Ratio (days to cover)  —  18.7
  • Short Percent of Float   —  14.6%

Recent Price Action:

 

 

Looking at the price action over the past week, you can see the stock is trading in a very tight range… and it hasn’t broken the ascending trend of the triangle. It’s not pressing the resistance but I will be watching to see if this tight range is going to be a spring up or down, and plan from there.

And VirnetX doesn’t exactly have the cash or earnings to grow and operate as a going concern… secondary offering maybe?

 

Final Thoughts

 

ZIOP and VHC are both still very much on the radar… along with NVAX which is setting up for a nice buy, whether it squeezes or not… potential is there.

NAVB, on the other hand, leaves a bit to be desired as a setup goes… this could take more time to figure out a plan because we need to see how it trades at the support level… it’s currently cruising down, so that will be the place to watch and assess it…

I will continue to keep my eye on all of these stocks and we shall see if anything develops.

No matter how intriguing these look, short squeezes take time to develop… if they do at all.

So while I am watching these stocks… I am also trading every day with my Supernova Boost setups…

If you want to see how I make money on a daily basis,  Join Supernova Today!

And I am running a new small account challenge that starts today… so get in quick.

 

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