Editor’s Note: Today, Chris is getting technical again. He just did two scans on the market that gave him 17 stocks ripe with profit potential. And today, he’ll show you how to play two of them…
There are two scans I use every day to discover short-term trading opportunities.
First, I look for stocks breaking above their 50-day moving average. The stocks highlighted by this filter usually make fast and aggressive moves higher.
Next, I search for stocks getting ready to enter a short-squeeze rally. Historically, these stocks make for great short-term options trades.
Using these filters, I can find stocks of interest that are ready to pop… or drop.
And I know exactly how to play them for profits.
Today, I found up to nine stocks during each of these scans. But two of them in particular are poised for a short-term move that could hand you a combined 23% gain…
These scans are simple. It doesn’t matter if you’re new to the market – because I’m going to show you exactly how to use them to find live candidates (just like the two I’m about to reveal) for your portfolio right now.
Scan #1: Stocks Breaking above their Bullish 50-day Moving Average
How it Works: This filter scans the universe of optionable stocks to find companies that are breaking into an intermediate-term bullish trend. It does this by identifying only those stocks that are moving back above their bullish 50-day moving averages.
What to Expect: This technical pattern often identifies stocks that are breaking back into a bullish trend after retracing from a recent high. Picking up a bullish trend often signals that a stock is ready to move even higher on its next rally.
Trading the Results: Historically, a break back into a technical bull trend attracts more traders to a stock, which is why the stocks highlighted by this filter often make fast and aggressive moves higher.
Speaking of fast and aggressive moves – this strategy recently handed readers the chance to make 25% on Twitter in 26 minutes. Learn more right here.
Now, here are a few stocks breaking back into bullish trends today…
Scan #2: Short-Squeeze Stocks
This is one of my favorite stock market scans. The scan drills down to find stocks that are getting ready to break out to higher prices as short sellers get forced to cover their losing positions. It’s one of the most effective and profitable filters in my arsenal.
How it Works: This scan first finds stocks that have excessively large short positions against them. The next step is to scan these stocks to identify those that are in a strong trend and preparing for a breakout.
What to Expect: Short sellers hate breakouts. It means that they are losing money quickly. As a result, a highly-shorted stock that starts breaking out will force the short sellers to start buying the stock themselves to close out their losing positions.
Getting in ahead of that breakout means that you’re in the stock before the wave of short covering that will move the stock quickly higher. These are some of the most exciting trades to watch unfold.
Trading the Results: My studies show that a highly-shorted stock is more than 60% likely to see a fast and aggressive rally within a month. Short-squeeze candidates are great short-term call option trades.
Here’s a list…
A name from the list that I’m particularly bullish on is PagSeguro Digital Ltd. (NYSE: PAGS).
PAGS is basically like the Brazilian version of Paypal Holdings Inc. (Nasdaq:PYPL) or Square Inc. (NYSE: SQ).
The Fintech company is based in Brazil and provides financial technology solutions for micro-merchants and small- to medium-sized companies in Brazil and internationally.
In 2020, shares of PAGS climbed 67% – and they’re on pace to continue that strong growth through the first quarter of 2021. The short sellers don’t agree though.
Last month, short sellers added to their position to take the short interest ratio to 11. Companies with short interest ratios over six make my list, so a reading of 11 is very bullish.
The stock is getting ready to roll higher, which will pressure the shorts to start buying the stock to cover their losing short position. I like that volume to help drive the stock to a target of $62.00 in the short-term.
And there you have it – two ways to find stocks about to bounce higher. Tomorrow, I’ll show you even more ways to make money.