Below is a list of small-cap stocks that have been heavily shorted by the street, and should the market continue to rally, these stocks could see their share price launch into the stratosphere (if they haven’t begun so already) because of the bears being forced to cover their short positions in the stock. Based on the number of shares that are being borrowed, for some of these stocks, it could take as many as 50-70 days to cover all the shares held short in the individual stock.
If you don’t know what a short squeeze is, that is where a stock starts to rise rapidly, and as the trend continues to escalate, the short sellers will likely want out. For example, say a stock rises 5% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.
Of those listed below, pay close attention to Conn’s Inc. (CONN), which is posting a very nice bullish flag of late, and has 58 days to cover. If the shorts are forced to cover this one, it will be a blood bath for them. The other stock is Lodgenet Entertainment, which has been trading in consolidatiion for the better part of this year. But like CONN, should it finally get a breakout, the move will be fast and ferocious. Please note that these kinds of stocks are highly volatile, and you should really make sure you know what you are doing before betting against the herd of shorts.
Here’s the list of 10 Stocks.
