Tech. Play v. Short Squeeze

[Gunnski]

Recently I made two investments that may make a good learning tool. Mainly regarding a short squeeze. Brian Shannon has a good outline of a "short squeeze" at Alpha Trends (Google it), if you are not familiar w/ S.S.

The two investments were pure technical and I did not even look very deep at fundamentals. So, I am not saying these are/were R-1 business.

First, AUO, purchased from a scan with a positive crossover set up, up volume, and a Hammer-Doji candle pattern. In at $18.20 on 4/17/08.

Second, APEI, purchased on a positive crossover scan, Tweezer Bottom pattern & up volume. In on 4/30/08 @ $30.67.

Both are doing well. Until I got to looking at the "Short Action". AUO has 15,093,200 (yes, that is 15 millon +) shares shorted to cover in 4.5 days. APEI has 1,466,500 shares to cover short in 14.6 days.

I only put this out because this would mean some serious price polarity, positive to negative. Especially, with AUO, 4.5 days.

I put this out not to pump the stocks, as they have already moved up, but to track these (2) and see what happenes. Will sellers jump in to push the price down to cover the shorts? Or, will buyers squeeze the shorts, so they will loss their positions? Or, will the shorts jump on board with the buyers, to cover their short positions? Which I want.

All dynamics to consider when making an investment.

For your interest and learning process only. I will be adding short interest review to my tools prior to any future investments. I have tight trailing stops on both of these, just in case. Never loss money!

[Gunnski]

Re: Above post^.

APEI up 2.98% Nice run up, then consolidated. AUO up all day, cleared short action. Up 2.36%.

Short squeeze action....? Hello Mr. Market.

[Gunnski]

APEI up 6.0% + today near the close. Surged through some serious resistance, around $38.00, on a downward long term trendline. But, very nice shorttern uptrend line for the "trader".



AUO down a tad. Interesting.

I would continue to follow both of these.

[danno]

Gunnski,

Maybe you can clarify something for me. Looking at Garmin short interest, The Nasdaq website you referred me to (which is great) shows a settlement date on 5/15/2008 and that there are over 20 million shares shorted and 5.8 days to cover. I have checked this against a couple other sites and get different data. One site told me that the higher the days to cover (short interest ratio) the more likely the stock is going to rise. However, this seems to be a lot of short interest.

Also can you explain the settlement date for me as this has passed. Also 5.8 days to cover from when? I'm not seeing the big picture here.

Any thoughts,

Dan

[Gunnski]

I understand your concern over the conflicting data. I can only figure that a short is when you borrow the shares. Usually, from your broker. With all the differnt brokers, I am sure there are differnent reporting methods, creating the conflicting info.

Options; PUT or CALL, have an expiration date or "X date". You'll know when they are going to expire.

Shorts are different. It is the numbers of shares a company has sold short, divided by the average daily trading volume. If you have a company with 1,000,000 (short shares) / 25,000 (ave. daily trading vol.) = 40 days to cover.

You want to short stocks that have a low number of days to cover.