FREE: Ultimate Guide To Identify Short Squeezes
FREE: Ultimate Guide To Identify Short Squeezes
What you NEED To Know To Identify Potential Big Moves
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Welcome to the ULTIMATE GUIDE TO IDENTIFY SHORT SQUEEZES!
In this guide we will go over the MUST KNOW to help you be able to identify the potential big moves before they happen.
This is a education segment that we see as very important given the current massive moves we are seeing in smaller cap names.
The goal is to help the learning curve so when we publish a report, everyone is up to par and able to understand our terminology and you can read it fluently!
We will go over the KEY definitions of the TOP characteristics we look for in identifying these big moves!
Remember, we called GME 0.00%↑ as a short squeeze before it ran huge and we did so by using the same criteria we will teach you below!
What Is A Short Squeeze?
What Is A Float In Stocks?
What Does % Short Of Float Mean?
What Is A Prior Runner?
What Is Relative Volume?
What Is A Short Squeeze?
This is very important to understand what a short squeeze is because this is where massive potential money can be made as you get demand from shorts covering and demand from momentum buyers stepping in. This can cause a large move in a short time frame!
A short squeeze is a situation in which the price of a stock or other security increases rapidly, causing traders who have sold the security "short" to incur significant losses.
When an investor sells a security short, they are essentially betting that the price will go down. To do this, they borrow shares of the security from another investor and sell them on the market, with the intention of buying them back at a lower price later and returning them to the original owner. If the price of the security increases instead of decreasing, the short seller will have to buy back the shares at a higher price, resulting in a loss.
A short squeeze can occur when the price of a security starts to rise rapidly, causing short sellers to panic and rush to buy back the shares they sold in order to close their positions and limit their losses. This buying pressure can cause the price to rise even further, resulting in even greater losses for the short sellers and potentially leading to a "squeeze" on those who are short the security.
Short squeezes can be caused by a variety of factors, including positive news about the company, increased demand for the security, or a lack of available shares to borrow for short selling. They can also be triggered by a sudden influx of buyers, such as hedge funds or other large investors, into the market.
What Is A Float In Stocks?
This is very important to identifying potential big moves. The lower the float means the more volatile and fast it can move if a short squeeze does occur! make sure you understand the meaning of float, ideally under 10M would be low for us.
The float in stocks refers to the number of shares that are available for trading by the general public. It is the number of shares that are not held by insiders or major shareholders, such as the company's founders or executives, and are available for trading on the open market.
The float is an important factor in the stock market because it can affect the supply and demand for a particular stock. A stock with a small float may be more susceptible to price fluctuations due to the limited number of shares available for trading. On the other hand, a stock with a large float may be more stable because there are more shares available to meet demand.
The float is calculated by subtracting the number of closely held shares (such as those held by insiders) from the total number of outstanding shares. This number can change over time due to events such as stock buybacks, issuances of new shares, or changes in insider ownership.
It is important for investors to be aware of a stock's float when considering an investment, as it can provide insight into the potential liquidity and volatility of the stock.
What Is Relative Volume?
Relative volume is greatly important because you want to make sure that the stock is trading at least 2 times more volume than it does per day! You want it to be a block party not a house party! You want buyers to come in and you want chatrooms, social media and everyone to have this stock on its radar! Identifying higher than normal relative volume is key!
Relative volume in a stock refers to the volume of shares traded in a particular stock compared to the average volume of shares traded over a certain period of time, typically a few weeks or months. It is expressed as a ratio, with a value greater than 1 indicating higher volume than the average and a value less than 1 indicating lower volume.
Relative volume can be a useful indicator for investors and traders because it can help them understand the level of interest in a particular stock. For example, if a stock has a relative volume of 2, it means that the volume of shares traded in that stock is twice the average volume. This could indicate that there is heightened interest in the stock, potentially due to news or other factors that have attracted more buyers or sellers.
Relative volume can also be used in conjunction with other technical indicators to help identify potential trading opportunities. For example, if a stock has a high relative volume and is also showing other signs of bullish behavior, such as an uptrend or a breakout, it may be a good time to consider buying the stock. On the other hand, if a stock has a low relative volume and is showing bearish behavior, it may be a good time to consider selling the stock.
It is important to note that relative volume should be considered in the context of the overall market and other factors that may be influencing the volume of a particular stock.
What Is A Prior Runner?
This is HUGE! When identifying potential big movers you want stocks that have ran big in a short period in the past! This attracts large volume and in result raises the probabilities of a move happening!
A prior runner is a stock that has previously demonstrated significant price appreciation or "ran" higher in price. Prior runners are often sought out by traders and investors as potential investments because they have a track record of success and may be more likely to continue to perform well in the future.
Prior runners can be identified by looking at historical price data and identifying stocks that have consistently performed well over a certain period of time. They may also be identified through technical analysis, such as by looking for patterns or trends in the stock's price chart.
It is important to note that past performance is not necessarily indicative of future results, and it is always important to conduct thorough research and analysis before making any investment decisions. Prior runners can be risky investments, as they may be more susceptible to price fluctuations and market volatility due to the higher level of investor interest in the stock
What Is The Short % of Float Mean?
The more shorts involved in the stock the greater chance for a large short squeeze! For example, GME 0.00%↑ had a massive amount of short $ of float before it ran huge! I think it was over 100% short which is why we called this for a short squeeze before the madness began!
The percentage of short of float refers to the percentage of a company's outstanding shares that are currently being sold short. It is calculated by dividing the total number of shares being sold short by the company's float (the number of shares available for trading by the general public) and expressing the result as a percentage.
The percentage of short of float can be a useful indicator for investors and traders as it can provide insight into the level of bearish sentiment or negative expectations about a particular stock. A high percentage of short of float may indicate that a significant number of investors expect the stock to decline in price, while a low percentage may indicate that fewer investors expect the stock to decline.
It is important to note that the percentage of short of float should be considered in the context of the overall market and other factors that may be influencing the level of short interest in a particular stock. It is also important to recognize that the percentage of short of float can change rapidly over time due to changes in investor sentiment or market conditions.
The Bottom Line
The bottom line is to identify a potential large move in a small cap you want the stock to check all the boxes of:
Being a prior runner.
Having a low float.
Having a large amount of short in the stock.
Having at least 2-3x relative volume on the breakout day.
We recently called COSM 0.00%↑ and it ran over 700% in 1 day! This stock checked many boxes as it had a large short seller, relative volume and a large history of running HUGE!
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