Good evening, Bulls.. It’s Sunday night and rainy here in Austin. My weekend of football is winding down – my team, the Texas Longhorns, won, but I’m not too impressed with the offense. The defense is solid, but Nebraska looks like the best team in the Big 12 right now. I digress.
Let’s jump into the markets.
Ok. I’ll keep the obvious short and sweet.. We’re at the top of a trading range on the SPX and sooner or later the battle for direction will resolve itself. If the SPX gets over 1135, short covering could rocket the prices up quickly. However, the longer we hang out at resistance, the more likely the breakout will fail and we’ll tumble as longs lose confidence and move up their stops.
They key for those of us that are short-term traders is to understand the ranges, likely move/pivot points, and what to do when the move happens.
- Find stocks heavily shorted with attractive technical setups. If the market heads up, we could see a substantial short squeeze. So, we want to find stocks with high Short Ratios and high Short % of Float. Check out Finviz.com for some great screening tools. Click on Screener > then descriptive > then select 20% under ‘Float Short’. From there, sort by volume so you see the most active trades first.
Stocks that fit this profile –
ATPG – I bought this guy a week ago and it hasn’t moved at all. I almost sold last week, but am holding just incase the squeeze happens. Right now it is consolidating down nicely on SMA100 with improving RSI14 and Full Sto. I nice and high short ratio of 5.72
NFLX – short ratio at 2.50 and short float % at 21.4. A decent number of people think that this stock needs to pull back further. However, it’s now found horizontal support at 140. Careful – a fall below these levels is technically bearish.
BYD – Keep an eye on this one – strong volume on Friday on improving MACD and bouncing Full Sto. We may have a bottom here even though the short ratio is 10.29 with 32% float shorted.
RAX – RAX has been participating in the cloud computing move lately, but has taken a healthy breather back to horizontal support in the $21 range. The short ratio is way up at 13.86 with 27% short float. The next pullback range is around $20 while others are looking for $18 (trendline support). However, with a market breakout, $21 may be a good entry on move back up as the shorts cover.
CLNE – I played a little CLNE Friday and am still interested. Got a little volume interest and has 25% short float. Pulled back significantly from Friday highs, so I’ll want it through SMA20 first.
Quick look at the week:
1000: September NAHB Market Index
0830: August Housing Starts
1000: August Building Permits
1415: FOMC Rate Announcement
0830: Initial Unemployment Claims, Continuing Unemployment Claims
1000: August Existing Home Sales
1000: August Leading Economic Indicators
0830: August Durable Goods
1000: August New Home Sales
Before the Open: Lennar (LEN)
Before the Open: Carnival (CCL)
After the Close: Adobe (ADBE)
Before the Open: General Mills (GIS), Zale (ZLC)
After the Close: Bed, Bath and Beyond (BBBY)
After the Close: Nike (NKE)