The recent drop in real estate and mortgage stocks pulled down a lot of other high-quality stocks, creating some potential short-squeeze trading opportunities. A short squeeze takes place when the short-sellers of a stock scramble to cover their bearish positions when the stock moves sharply upward.

A stock's short position is measured by the short-squeeze ratio, which represents the number of days it would take for the short-sellers to cover their positions based on the stock's recent daily trading volume.

Stockpickr has put together a list of the top 10 short squeeze stocks that trade on the New York Stock Exchange. All of these stock price/earnings-to-growth (PEG) ratios of 3 or less and short ratios greater than 17.

One heavily shorted NYSE stock is Kingsway Financial Services ( KFS), a Canada-based property and casualty insurance company with a short ratio of 31.2. The company just announced a plan to buy back up to 2.8 million shares of stock on the Toronto Stock Exchange. During the last 12 months, the company bought back 563,600 shares. KFS has a price/earnings (P/E) ratio of 9.2, a PEG ratio of 1.1 and a yield of 1.7%.

Kingsway stock is owned by Abingdon Capital Management, a McLean, Va.-based money manager that specializes in looking for stocks for which there is a large difference between price and value. Abingdon also owns Fidelity National Information Services ( FIS), which has a short ratio of 0.7, NRG Energy ( NRG), with a 6.8 short ratio, and Supervalu ( SVU), which has a short ratio of 2.5.

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