Twice a month, my database downloads short interest data fresh from each of the stock exchanges.
With more than 17,000 data points hitting the hard drives in less than one minute, this quick scan is able to show me a list of stocks getting ready to pop higher.
Take a look at my last scan, from two weeks ago:
Over the last few weeks, I’ve been warning you that this market is becoming increasingly shaky.
Just look at the buzz over GameStop Corp. (NYSE:GME), BlackBerry Ltd. (NYSE:BB), and Koss Corporation (Nasdaq:KOSS). These stocks have shot up over 300% in a matter of days, and it’s not because of their fundamentals.
There’s a sudden fascination with knocking billion-dollar short sellers out of the market – and it seems to be working. These virtually obsolete companies have skyrocketed to unprecedented levels this week thanks to short squeezes.
You know how it works. People are shorting these stocks, betting that their bullish ride will break…
But instead, the stocks keep going up. And these short-sellers are forced to buy back their shares, effectively pushing the stock even higher.
And guess what? These incredible short squeezes could be exactly the “frenzy” I’m talking about: the frenzy before the correction.
Less than 30 minutes into this morning’s trading, the Dow plummeted more than 500 points.
And with the market ahead of a potential correction, I want to introduce you to a new indicator – one that won’t show you stocks about to break higher, but stocks about to break down.
This the best bearish indicator in my technical arsenal – and it will tell you exactly what stocks to avoid… or short…