Below are 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.
A few I’d keep an eye on are those with the potential to breakout in the short-term such as PETS, WIBC, LPHI, CCRT, and ENP. With CCRT, it has 77 days to cover, with a solid potential breakout play setting up. STBA has put in a nice rounded bottom, with a nice light-volume pullback offering a good entry, and CMED is putting in a textbook bull-flag price pattern.
Here’s the list of 25 Stocks.