Short Squeeze

Find your short squeeze stocks and have them handy! When the market started to rally today I went straight to my short squeeze stock, LULU. The stock rallied 10% from its bottom (I managed to get a decent 5% move) in just 1 hour. When you see or feel that the market is finding buyers, step in and buy your short squeeze stock. LULU closed on the highs of the day (even though it closed -3%). Do not buy during the sell-off, wait for the buyers to get aggressive and jump in to your stock. I will try to find some more stocks today and post later, but these will probably be the major stocks I follow and have gone over before.

Update 2: LULU

Apparently this morning's weakness should have been bought. It is up $1 since then which is about 4.5%. I will try and buy a bit on a pullback to 23.

Update: LULU

Pulled back to the 10 DMA. And a previous high. There is a good chance that this can go a little lower to 22 (which would make it an easier buy), but it looks tempting here, especially if the market as a whole picks up.

Now, a check on the short interest

As of 09/15/2008 the shares short are 12,736,393 from a previous 14,869,887 with an average volume in the stock of 1,592,988.

Unfortunately, this only include 2 days of major short squeezes, 9-11 and 9-12 and not 3 following squeeze days 9-16, 9-17, 9-18. Lets assume that 2 million shares were covered during this time. That leaves us with 10.7 million shares short and about 7 days left to cover at this current volume. This is still pretty high!

I think this stock can easily see 28 soon, the entry point on this will need to be handled with care so that you don't get burned out of this. I will try to make an intraday post if I go long LULU. I will be using small position sizes to minimize loss and add to it if my thesis proves correct.

FSYS, LULU

FSYS is looking strong after a pullback. I am still waiting for more conviction before I act, especially with my bearish view on crude.

LULU formed a temporary bottom at 23. I was tempted to buy, but I was afraid it would just stop me out of a quick loss (which it probably would have at 22.8), so I never bought. Now it is at 24 and change. I will wait to buy this on weakness in the 23s.

Also, I need to reevaluate the sectors I trade in and see if any are bottoming.

Charts

FSYS obeys this trendline way too nicely. Its kind of scary.

If my predictions come true with lower oil prices, this should be taken right back down to the bottom of the trend. And that momentume indicator on the bottom looks like it wants to head down down down.

WNR

A pullback to the 20 DMA (blue line), 10.5ish, would be a very nice setup for continuation move up. Crack spreads should hold steady as crude bounces around in a range.
Old news, but: WNR 9/16/2008 02:55pm Hearing renewed takeover chatter circulating

TSO

This stock has not performed. But it is setting a very nice base if it chooses to move higher from here. Old news but, 9/17/2008 08:12pm Hearing Valero may be shopping to take out peer refiner Tesoro

I don't understand why TSO is acting similar to VLO, when it seems like VLO has many more issues: notes it has limited price changes at gas stations and is currently losing money on fuel sales. That does not sound good at all! And this: Reports malfunction during restart of Houston refinery (83K bpd).

I believe I suggested this before, going short VLO and long TSO or WNR sounds very good to me, but they don't seem to be trading on my analysis.

LULU

LULU looks good if it pullsback to the 22 level. I wonder what FSYS will do today. Will it break out of its channel? If it does not today and acts weak again tomorrow, then it might be good for a quick short.

Crazy Day

The news today changes everything. SPY has room to run to 125 QQQQ can run up to 44. But, I expect it to be very choppy. The action in MS, GS, XLF was crazy. The lesson I learned today was to NOT chase anything. Nothing in this market is really worth chasing. Financials will have sell offs if you want to buy in. Coals will have dips before buyers are found. I almost never play the financials, and when I do play I use SKF and UYG. If I do decide to play financials I will need to greatly decrease my positions due to this volatility. This way you can buy more on dips. I highly recommend people check out Fly's list of heavily shorted financials here. Also, take a look at some home builders. I made my list HOV, LEN, MTH, PHM, CTX, DHI, GFA, KBH, TOL. MTH has 25 million shares short, with today's volume being 2 million. It is very close to a 52 week high. Can anyone say short squeeeeeze? HOV also has a huge short interest and looks like it has bottomed. GHL has almost 8 million shares short, with average volume are .4 million.

The sad thing is that all these stock will probably gap up tomorrow, leaving me confused and nervous about what to do. I guess we have to take what we got!

Did you guys see LULU today? Its so sad that I sold this stock, it has gone from 18 to 24 in such little time. I will try and buy it on any pullback.

FSYS is interesting for a long, but I would be careful with that one.

TSO is looking good. But oil is so tricky to play. Crack spreads look like they are poised to move higher.

LULU is unstoppable

+4% today
UPDATE: close +3.3%

Beautiful LULU

Bounce off of the 10 DMA, 20 DMA, previous low. I am expecting a move above the 50 DMA. Volume has been light the last 2 days, so with a further move up, expect more of a squeeze. First target should be 23-23.5

FSYS hit the low 46s. I would stay away form it for now.

Update: LULU, WNR, FSYS

FSYS currently -10%
LULU +4%
WNR rallying from the open.

I currently have 0 holdings, but LULU looks interesting around 21 (I will wait for further consolidation).

UPDATE: bought a few shares of LULU @ 21.4, couldn't resist. Stop loss (maybe) at break even.

UPDATE 2:
Stocks ended: LULU +7.7%, WNR +5%, FSYS -5.5%

WNR had a 14% turnaround from open to close.

Update

Crack spreads fell today. I thought they would surely rise today. Seeing crude below 100, and hearing about $5 gas, I thought it might even go higher today!


Falling significantly from the highs, but still looks good. Overall, I expect oil stocks to firm up this week.

WNR, pulling back, gave back most of its gaves form friday.

It is right at the 10 DMA. Further pullback followed by strength would make this a buy.

FTO, jumps right back into its former range.

I think this should be day traded to both side with the huge moves it has. It looks bearish here.

TSO, closes below 16, very bad.


VLO

With exposure to hurricane Ike, this look very bearish.

Pair trade? Long TSO short VLO.

LULU

Pulls back to the 20 level. Buy once strength is shown on the intraday level. Could be challenging in this market.

ICE and NYX looking very bearish.

LULU

Traded 2.1 million shares on Friday. If we assume 1 million were covering short and using our previous calculated number,

11.8 - 1 = 10.8 million shares left to be covered.
New Days To Cover (Short Interest Ratio) 8

LULU Update

LULU is currently +10% (update: ended +14%)
Short Percent of Float 74.35 %
Days To Cover (Short Interest Ratio) 16.2

This squeeze can last a while!

14,869,900 share short
1.2 million avg volume

4.3 million shares traded, lets assume that 3 million were shorts covering (thats huge).
That leaves 11.8 million shares left to be covered.
New Days To Cover (Short Interest Ratio) 9.8

Reuters on Earnings
AP on Earnings

LULU

Earnings Sept 11, EPS exp: 0.13, Previous Year 0.07

If LULU wants to bottom like my other retail picks SHLD and MW, then it has to react well to earnings. I have no idea if the expectations are too high, too low, or if it is 'good enough' that they come close like many other retailers. I will rely upon the stocks reaction to tell me how investors feel about the earnings. If the slow down in the economy is affecting sales, then their whole expansion of stores strategy could be a huge burden.

UPDATE: LULU is currently +10%
Short Percent of Float 74.35 %
Days To Cover (Short Interest Ratio) 16.2