And much like an army of ants will react to a group of kids pouring water on their den, short sellers will do the same once a stock reverses course and begins moving up. They literally scatter in each and every direction looking for cover. This causes explosive moves in a stock that would otherwise be impossible without the help of short sellers adding fuel to the upside by covering their positions.
For this reason, the list of stocks that aggressive traders or investors should get long must involve short sellers. It is your job to use their blind aggression to create substantial profits over short periods of time. You become the bully.
I outlined recently some concern I have for the possibility of downside in the markets over the next few weeks. With that in mind, it is never too early to begin looking for those stocks that have been the strongest during the most recent rally and have been attracting the watchful eye of short sellers, as exhibited by a greater than average short interest percentage.
All of the stocks listed below have been extraordinarily strong and are exhibiting a good deal of doubt with respect to their moves up. Short sellers will surely pile on as they fall, should the market decide to decline further. They should be on your list of prospective stocks to buy when and if the market does dip:
- Autonation (AN)
- Baidu (BIDU)
- Berry Petroleum (BRY)
- Changyou.com (CYOU)
- 51job Inc. (JOBS)
- Linkedin (LNKD)
- Liquidity Services (LQDT)
- Netflix (NFLX)
- Pricesmart (PSMT)
- Quality Systems (QSII)
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV