Monday, July 28, 2014

What are the shorts thinking?

Once again we look for a potential “Short Squeeze” opportunity which is a situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock – etc, but also to see if there is a contrarian opportunity.

At July 15, 2014 I looked at the top 20 stocks with the greatest short sale increase over the past 2-week period. There were 5 energy stocks, 6 financial stocks and 6 material stocks – the rest were industrial and health care. So materials are the most popular short sale sector – the unpopular Teck Resources Ltd (TCK.B) was on the list

Our chart today is materials component Teck Resources daily plotted with two moving averages and money flow numbers plotted on a momentum histogram – with all paining a bullish picture. Another study – not shown – is Teck plotted above the broader TSX60 index clearly displaying a positive relative perform vs. the TSX60 Index. Yes there could be a contrarian opportunity here.

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