This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cramer's 'Mad Money' Recap: Short-Squeeze Seize

Click here for an archive of Cramer's "Mad Money" recaps.

Jim Cramer introduced a new game with new rules on his "Mad Money" TV show Tuesday, called short-busting.

The shorts are the people who bet against a stock, and short-busting is betting that the shorts are wrong, he explained. In a heavily shorted stock, when all shorts try to cover their shares at once, we call it a short squeeze, which causes the stock to jump.

That's where short-busters make money, Cramer said.

If you're going to ride the short bust, you must eye the stock's average daily volume, which reveals how hard it would be for shorts to close or cover their positions, he said. And if the shorts are deep, they'll drive up the price to get out with profits.

Another important factor to look at is the insider buying of a shorted stock because a big shareholder buy lets people know that things are OK enough for them to join the crowd, Cramer continued.

Though Cramer, when at his hedge fund, used to short stocks all the time, he still worried about losing money.

However, now that James Altucher, a contributor to, "has gotten systematic about the whole thing" and taken these two key metrics and put them to work on's Stockpickr service, Cramer said he has two short-buster stocks that stick out in the mechanics and on their own merits.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CAT $61.41 -1.17%
GBX $26.10 -0.61%
RPM $37.38 -1.53%
AAPL $93.70 -0.60%
FB $101.91 0.90%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs