BALTIMORE ( Stockpickr) -- "Buy American" has been a good catchphrase for investors in 2012. Even though the S&P 500's performance hasn't exactly been awe-inspiring of late, it's been a whole lot better than its foreign equivalents. While S&P's up around 4.5% so far this year, the MSCI Emerging Markets Index is down 2% and change on the year.
Emerging markets aren't alone. The MSCI EAFE Index, a world index, is down more than 4% so far this year. From the eurozone debt crisis to softening economies in markets like China, there's reason to steer clear of foreign stocks right now. But that doesn't mean that they're good reasons.
And now, with investor aversion to the risks of foreign stocks reaching highs, a handful of big overseas names are poised to pop from a short squeeze. Here's everything you need to know to take advantage:In case you're not familiar with the term, a "short squeeze" is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing 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 estimates 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. >>ACTIVE STOCK TRADERS: Check out Stockpickr's special offer for Real Money, headlined by Jim Cramer, now! Naturally, these plays aren't without their blemishes -- there's a reason (economic or otherwise) that these stocks are being heavily shorted. But for investors looking for exposure to a speculative play with a beefier risk/reward tradeoff, these could be powerful upside plays for the coming year. Without further ado, here's a look at our list of foreign short squeeze opportunities.