Tech Stock Short-Squeeze Plays for June

BALTIMORE (Stockpickr) -- With spiking volatility and dropping share prices, the last month and a half have been anything but auspicious for investors. For short-sellers, though, it's been a different story. With hopes that we could be watching stocks tumble back to much lower levels, short-sellers continue betting against stocks.

At the beginning of June, short-interest ratios were nearly unchanged over the trailing month, despite the fact that stocks had fallen by double digits in the previous 30 days. That suggests that short-sellers are holding open short positions, hoping for a further fall from Wall Street. But if June's uptrending turn is any indication, we could be looking at a potential short-squeeze opportunity.

A short squeeze is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing short-sellers to cover their positions -- and share price to skyrocket. One of the best indicators of just how high a short-squeezed stock could go is the short interest ratio, which divides shares short by average daily trading volume in order to get a ballpark estimate of the number of days it would take for short-sellers to cover their positions. The higher the short ratio, the higher the potential profits when the shorts get squeezed.

Since tech stocks are among the quickest to react to market conditions, they also stand the biggest chance of squeezing first. That's why we're looking at a handful of highly shorted tech plays this week.

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