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I’m here to tell you, the retail investor-driven short squeeze trade is alive and well – still the hottest trade on the market.
In my Super Squeeze Profits trading research service, we’re actively targeting S.C.A.N. signals on five options trades in potential short-squeeze situations. Since mid-February, we’ve had the chance to close out 16 double- and triple-digit wins, including 313%-plus on CLOV that was open just 39 days.
So, yes, the short squeeze can still be worth your while.
But two of the market’s biggest “headline” short squeezes are finished. They’re done, completely out of gas, and ready for a big reversal. And I’m concerned a lot of people who are long on these stocks, expecting another big pop, could get crushed.
So, whether you’re trading these with options or holding them, here’s why this morning is the time to take your quadruple-digit profits on these and head for the exits…
These Legendary Short Squeeze Plays Are Played Out
GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings Inc. (NYSE: AMC) helped make “short squeeze” a household word in 2021. Even folks with no money at all in the markets are familiar with these two.
They’ve routinely grabbed headlines as “meme stocks,” and, more importantly, have delivered 1,700% and 3,200% profits, respectively, this year for regular retail investors who hung in tough and targeted the huge short positions Wall Street had on these.
None of this is lost on corporate leadership. GameStop has been executing on a successful turnaround plan that should get it out of the basement for good, and AMC is finally getting moviegoers in seats. But in both boardrooms, they’ve also leveraged their newfound fame and newly juiced-up stock prices in some interesting ways.
Just this past week, GameStop – whose balance sheet is starting to look good – executed a $1.12 billion stock offering, and earlier this month, AMC completed a $587 million equity offering, selling around 11.5 million shares at an average price of $50.85.
Options Trading Guide
There's a surprising secret that separates trading masters from the folks fighting over Wall Street's table scraps.
Options Trading Guide
There's a surprising secret that separates trading masters from the folks fighting over Wall Street's table scraps.
Enthusiastic investors went wild, despite being diluted six ways from Tuesday, sending both companies’ stocks rocketing; that’s something we’re seeing more and more of in these meme stocks.
It’s catching, too.
Torchlight Energy Resources Inc. (NASDAQ: TRCH), Castor Maritime Inc. (NASDAQ: CTRM), and Express Inc. (NYSE: EXPR) have generated billions of dollars of capital over the last several weeks by selling additional shares at their currently inflated prices.
But here’s the problem… and the bright red “Sell!” signal…
By any stretch, GameStop and AMC did the right thing raising that capital, turning warm, fuzzy fame into cold, hard cash. But in the case of AMC and GameStop, none of that capital is going to be enough to trigger a fresh round of short-squeeze profits.
What the crowd isn’t getting or seeing here is that short interest in those stocks has dropped to negligible levels. Fourteen percent of AMC’s float is short right now, and 20% of GME’s is short. That sounds like a lot, double-digit percentages, but the short interest ratio on GME is 1, and on AMC it’s 0.7 – far too low to force a short squeeze rally.
With a big picture like this, the current short squeeze effort on these stocks is pretty much doomed. I see GameStop and AMC heading much lower before they resume a gradual uptrend, so it’s time to take your profits and head for the door.
Bottom line: Unload GME and AMC shares for whatever price you can get, and do it today.
But like I said, these two stocks aren’t the only short squeeze stocks – not at all. There’s almost always a short squeeze happening somewhere, if you know where to look, and the profit potential can be just as big and fast.
I’ve made a couple of tweaks to my proprietary S.C.A.N. algorithm that help me identify what I believe are the two most important, reliable indicators of a short squeeze about to explode. When I see something promising, I hit my Super Squeeze Profits subscribers up with an alert – with entry instructions and suggested profit targets. You can click right here, and I’ll show you more about why I think the short squeeze is the market’s hottest trade and tell you all about how it works.
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About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.