Top Homebuilder Short-Squeeze Plays

The government is doing everything it can to get banks to lend and to lower interest rates. Mortgage rates are now at a 37-year low, with an average rate of 5.2% for a 30-year mortgage. Applications for mortgages are surging, according to The Wall Street Journal, which may mean that that this is the bottom for lenders and homebuilders.

Some of the homebuilder stocks have dropped as much as 44%, creating short squeeze opportunities. A short squeeze takes place when short-sellers quickly cover their bearish positions on optimistic news, which can move the price of the stock up sharply. The metric for measuring short-squeeze opportunities is the short ratio, also known as the "days-to-cover ratio," which is the number of days it would take the short-sellers to cover their positions based on recent average daily volume of the stock.

Stockpickr has reviewed all the heavily shorted homebuilder stocks and compiled a list of the top homebuilder short-squeeze plays.

To read more, visit Stockpickr.com.