Punishing the Pack Mentality

Gaming the market for fancy types of trades can often be a rather perilous endeavor, since there is considerable danger that we succumb to ego and hubris in lieu of sound, profitable decisions. 

Be that as it may, there is no denying some of the magnificent moves we have seen in heavily-shorted stocks to the upside of late, which seem to be consistent with a developing bull market in equities with plenty of skeptics yet, at least in specific names. Thus, attacking heavily-shorted stocks in this market climate remains a strategy we are discussing and playing with Members. 

Tesla is, of course, the poster child for this phenomenon. But other names like PETS seem to be in play too. BYND CVNA SHAK are a few others of note--As an aside, I define a "short squeeze play" as any stock with more than 7-8% of the float, or shares outstanding, held short.  

Now, we also can look at names which recently got battered as squeeze plays to buy on the dip, provided they fulfill some key elements for us. Specifically, SNAP recently got hit on earnings. 

However, as we can see on the updated SNAP daily chart, the name held its 50-day moving average (dark blue line, arrows) well and could easily turn back higher for a squeeze, as it is trying to do this morning. I still view SNAP as a very successful turnaround since late-2018 and do not think stubborn shorts are done being squeezed yet.