The Anatomy of a Short Squeeze

In the stock market a short squeeze is a fantastic way to make wealth. SHORT squeezes are a situation where a large number of shares get caught short during a price move higher. As a result, many will potentially be forced into a margin call which means they have no choice but to either cover, send money, or raise funds elsewhere. This usually results in forced buying which can result in even higher prices and force even more short sellers to cover.

When it comes to a playing for a short squeeze there are two things you need to know:
1)The short squeeze potential of a stock (i.e. which stocks are most vulnerable to a short squeeze).
2)When a short squeeze is likely to occur in those stocks. (i.e what things can you look for to actually make a purchase in anticipation of a short squeeze).

Understanding the anatomy of the short squeeze is important, for it happens to some stocks more than the others and the underlying fundamentals don't really matter at this point. This article will discuss where it will occur and which stocks are most vulnerable to a short squeeze.

A stock that has zero short positions on cannot see a short squeeze. Stocks with a small number of shares cannot see much of one. So, you should be looking for a HIGH market cap of shares short as a percentage of market cap. You can actually estimate this reasonably accurately.
1)Go to finviz screener and make sure you have Market Cap, Short Float %, Shares Float % and filter it so you don't include any ETFs.
2)Click the "export" button and download the .csv or excel file.
3)Set up formulas.
Step 3 I must explain.

We need to calculate Market cap SHORT as a % of market cap. Float * % of float short * Price= MARKET CAP SHORT. Market cap short/ market cap= market cap short %.

The higher the number the more difficult it will be for all of them to simultaneously cover at current prices. For example, a market cap short % of 50% indicate that IF all those short had to cover at current prices, they would basically need HALF of all owners of the stock to sell to them. That is substantial because it is very unlikely half of the shares can be sold to them at current price. IF those holding refuse to sell, those short must offer a higher price until they can sell.

This gives huge potential power for a short squeeze the higher this number is.

Next we want to look at % of market cap that FLOATS= (Float * Price) / market cap.


The "FLOAT" represents the available shares that are actively traded as opposed to those held by insiders and institutions that HOLD. The fewer that FLOAT, the harder it is to accumulate shares and the more likely a buyer will have to pay a higher price if he wants in since the rest of the owners are likely to either hold or in some cases are FORCED to announce their sale well in advance. So not only if scarcity of shares FLOAT good, but if a large percentage of the float is short, that also signals that of the shares traded, a high percentage of them are short and thus will have difficulty covering.
So we want:
1)Market cap short % to be high
2)Short as a % of float high
3)Float as a % of market cap low

We can do a simple formula.
We want the numbers where HIGH is better in the numerator, and the small to be in the denominator. For those that skipped high school math that means we want market cap short % and short as a % of float divided by float as a % of market cap.
So
((Market cap short %+Short as a % of float)*.5)/Float as a % of market cap.
The higher the number the better.

Now I want to fix up this list and that means I have no patience for erroneous numbers. I will use the sort function in excel and eliminate these.
Things like market cap short over 100%, short as a % of float over 100% and float as a % of market cap over 100% or error messages for dividing by zero I delete. I also want to delete individual categories near the worst of that stat. For example the market cap short % I want to be around 5% or higher. The short as a % of float I want to be maybe 5-10% or higher. The float % as a market cap I want to be less than 90% (that represents at least 10% held between insiders, major owners and institutional holders). Then the final metric I will use as the determiner how to rank stock's short squeeze potential from there and get rid of the worst and focus on the start of that list.

This only tells you that ONCE a stock starts being bought aggressively AND the shorts start to cover that the potential for a short squeeze exists and is large. It does not give you any clue as to IF/WHEN this short squeeze will occur which is why it is also important to recognize and adjust.

With that being said here is a list of all those remaining with a formula that says they have a ratio equal to at least .15 or more.

ATLC
SCLN
SNTA
FMD
BTH
VRA
SWFT
SPWR
NQ
JAKK
JASO
CSUN
XONE
TTS
CALL
GTXI
SODA
AFSI
CAS
PHMD
EBIX
USNA
ANGI
TITN
RES
VHC
LQDT
NGVC
UNIS
ALJ
BRLI
WNR
TSLA
GMCR
MILL
SCTY
LF
WRLD
BONT
BBRY
CLNE
CLNT
PAMT
NEON
BKS
RATE
SPPI
IPGP
TEAR
PACW
IMAX
GNK
TPH
END
KIOR
KWK
VRNG
CONN
KBH
RVLT
MFRM
IOC
YGE
NLNK
Z
BKE
MITK
HOV
MELI
IRWD
TRIP
MOH
IPI
OPK
HLF
AFOP
MNKD
APP
ROIAK
CNS
MNI
GPRE
RBA
HXM
FRO
WPRT
DANG
CBZ
CHCI
ECHO
SA
IRDM
ETM
HGG
CAB
SUSS
WTI
VPRT
OLED
GOL
VCLK
SHLD
DLB
CCXI
AMRN
KNDI
MR
LULU
STSI
HK
CRR
JBLU
KEYW
EAC
MUX
PSUN
CVC
GTI
SZYM
QDEL
WBMD
ZUMZ
AXDX
ENPH
DGIT
MLNX
AMKR
TFM
RAX
USG
AXL
SVU
CNQR
ELLI
DHI
OSIR
ATRS
CWTR
DWA
MBLX
SIGA
AH
ARCO
MANT
BPZ
SOL
FWM
SD
HNSN
FSLR
GRMN
SAM
BYD
MACK
PRLB
MEET
YELP
FRP
CCBG
MTZ
AKRX
PATH
IMH
GLNG
AMRI