If you have noticed a late-day bounce before trading closes for the day, it may be caused by a short squeeze, according to Rev Shark. The power of the short squeeze can make a stock rise quickly, creating opportunities on the long side for vigilant investors. With the recent drop in financial stocks, there may be some short-squeeze opportunities in that sector to keep an eye on.
A short squeeze takes place when short-sellers quickly buy in shares of a stock in order to cover their bearish positions, driving the price of the stock up sharply. The ratio for measuring short-squeeze opportunities is the short ratio, which is the number of days it would take the short-sellers to cover their positions based on recent average daily volume.
Stockpickr has reviewed the heavily shorted financial stocks and created a portfolio of the top financial short-squeeze plays, all of which have market caps of more than $500 million.
To read more, visit Stockpickr.com.