Apparently, “Short Squeeze: How to Spot Explosive Stocks Before They Pop” is one of my most popular articles, so we’re going to talk a little more about short squeezes. In the previous article I mentioned that checking for catalysts is a key element I spotting short squeezes.
This is an area where retail traders like ourselves don’t have a lot of time or experience. Today, I’ll tell you what you need to know to stay ahead of the pack. So without further ado, use these strategies to find catalysts:
1. Earnings Surprises
Earnings reports are the easiest catalysts to spot. My favorite site to look for upcoming earnings reports is EarningsWhispers.com. Sure, it looks like a fifth grader designed it in the 1990’s. The only thing missing is the “under construction” sign. They’ve also subscriber-locked a lot of stuff, but you at least still get basic lists of upcoming earnings.
If you just want a comprehensive list, you could alternatively go to the Nasdaq Earnings Calendar.
2. Analyst Updates & Price Target Increases
When major firms like Goldman Sachs, Morgan Stanley, or JPMorgan upgrade stocks or raises price targets, it can cause a wave of buying pressure. If you want a place that lists actions from all the firms, go to MarketWatch.
Another resource is to look at popular analyst ratings. You can get some daily buy and sell ratings on TipRanks.
For real-time sentiment, you can find out what a bunch of people are staying about stocks on Twitter and StockTwits. Just do a search for “$TICKER upgrade” or whatever and you’ll get a sense of what traders are thinking.
3. Insider Buying
If a company’s executives or board members buy shares, it signals confidence which could scare short sellers into covering. Go to OpenInsider.com and look for CEOs/CFOs/Board Members buying large amounts. Focus on transactions that are buys, not option exercises. This site is pretty easy to use, just look up the filing and it shows the list of insiders and what action they took.
4. Buyouts & Strategic Investments
Check SEC filings (Form 13D/13G) for new institutional investors, which can hint at potential mergers and acquisitions (M&A) activity. Unfortunately a lot of sites require subscriptions to get this information. Fortunately, you may be able to catch some action on Reuters M&A.
There are other ways to spot big moves such as unusual options activity, government contracts, and regulatory changes, but many of the best resources for that cost money or aren’t beginner-friendly. I wanted to keep this list simple and actionable.
So there you have it: four easy ways to check for catalysts that could spark a short squeeze.