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 the fifteen listed below, I like Brookfield Homes (BHS), which has a nice bull-flag price pattern, that it is currently breaking out of today, followed by Conn’s Inc (CONN) which has taken a beating for quite some time, but is looking to finally base with an inverse head and shoulders pattern, and a very tight price range that followed thereafter.
Here’s the list of 15 Stocks.
