The market is rallying to new heights, and stocks like Blackberry (NYSE: BB), AMC (NYSE: AMC), and Gamestop (NYSE: GME) are taking off like fireworks on the 4th of July.
This has caused investors to dig up all the other short squeeze candidates on their list.
They’re scrambling to find the next set of shorted names ready for liftoff.
Of course, this list of candidates changes every few weeks.
That’s why I check my list every single day, and my technical data shows me that short sellers are becoming more active as we approach the summer season.
They’ve been quiet all throughout April, but now there are more than 187 stocks that we could squeeze for a big profit.
This past December, I showed you how to find a short squeeze before it happens.
Let’s briefly go over again why short squeezes work…
Everyone remembers the GME story from February.
It became a “trading revolution,” one brought on by the rise of apps like Robinhood – and it created wave after wave of speculative surges – just like the ones we’re seeing right now.
With extra volume pouring into the market, billions of dollars are up for grabs every day – historically amounts up to $970 billion, in fact.
Now, GME was an extremely rare example of a short squeeze, but there are hundreds of these situations playing out every month on stocks that don’t get as much attention.
Shorting a stock can be a dangerous undertaking.
You’re betting that the stock will decline and using margin accounts to do it – which means that you’re leveraged.
If the stock goes down, the shorts are happy, and they pocket their profits but it’s a totally different story when a stock goes up though.
When this happens, the shorts start feeling the pain as their leveraged losses add up quickly.
At some point, they have to call it quits and cover their positions to limit losses.
When this happens, the entire group of shorts will start buying shares at any price in a panicked frenzy, causing the stock to go parabolic.
That’s a short squeeze.
History shows that short squeezes play out over a four to six week period, and out of the 187 stocks currently on my list… three are ready for liftoff.
You can ride these three short squeeze rockets straight to the “moon”…
CJ’s Summer Squeeze #1
Cinemark Holdings, Inc. (NYSE: CNK)
Everyone has their eyes on AMC, and why not?
The stock went up more than 100% this week and has become the headliner for the meme investors.
But despite all the noise surrounding this trade, there’s another backdoor trade we can use to profit from AMC’s success.
That trade is CNK.
It’s another movie theater company that is reopening their doors and striking fear into the hearts of the short sellers.
The stock is trading above its bullish 50-day moving average and we just saw a silver cross form as the 20-day moving average crossed above the 50-day.
To put this into perspective, the last silver cross was in November, and the stock made its way from $14 to $28.
Short sellers have been adding to their positions, raising the short interest ratio to 6.2 while the percentage of short shares to float is sitting just below 20%, that’s right… 20%!
Shares are moving higher on the reopening momentum, meaning that the stock will be pressuring shorts to cover their positions, which means more buying pressure for the stock.
I’m targeting a move to $35 over the next four to six weeks.
CJ’s Summer Squeeze #2
Azul S.A. (NYSE: AZUL)
South American airline companies are starting to see increases in traffic just as we are here in the U.S.
Short sellers have been hammering the stock as the short interest ratio is now sitting at 9 and the short interest as a percentage of outstanding float is over 50%.
The stock is being driven higher by volatility and volume, the combination that we like to see.
Not to mention, shares are soaring to new all-time highs as air traffic picks up and revenue forecasts are on the rise.
Strong 50-day trend suggests a trajectory that will take the stock to $33 over the near-term.
CJ’s Summer Squeeze #3
BJ’s Wholesale Club Holdings, Inc. (BJ)
We exited a call on this company just ahead of their earnings with perfect timing as the market hit the stock with a “sell the news” response as the company planned a new sale of stock to raise capital.
The aftermath of that selling spree has cleared, and shares are finding support at their 20- and 50-day moving averages, both of which are in a bullish trend higher.
Consumer demand at the wholesale club level remains strong as companies like BJ and Costco (NASDAQ: COST) are seeing strong revenue growth and traffic.
Short interest ratio for the stock sits at its highest in months at 11.7 while the short interest as a percentage of float is also high at 13%.
Watch for a break above $50 to trigger a short covering rally that will carry the stock to a target of $60.
With each passing day I’m seeing new, different ways for us to make money.
The post-pandemic reopening is presenting us with never-before-seen investment opportunities, and I’m going to help you get into every single profitable play that I see.
So please make sure to catch my next edition of Straight-Up Profits for the most up-to-the-minute ways to play current market patterns.
Until then,
— Chris Johnson
Source: Straight Up Profits