I’m looking at 5 main stocks to play tomorrow—probably some kind of play towards the market close since I’m not allowed to day trade. I don’t care what kind of market we’re in, Friday afternoons are always scary for short sellers and thus, short squeezes are quite common and predictable.
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The top two potential Friday afternoon short squeeze plays are two former momentum stocks that have both gotten decimated after earnings, even though neither report was that bad. (Welcome to the land of exponential gainers, where anything less than perfection is failure!) Crocs (Nasdaq: CROX ) and Vasco Data (Nasdaq: VDSI )—trying to pick the bottom on these two is impossible so don’t bother trying. I can’t imagine there’s much downside left on either of them, but there’s really no way to tell; in fact, the only thing sure is that they won’t be top performers again anytime soon. Ideally, one of them or maybe even both will show some stabilization and only then will dip buyers begin to enter and shorts will get nervous and cover. No matter how many times you play this kind of pattern, each one is different so don’t try to play them exactly like you might’ve done in the past.
I’m also looking at two other stocks that have been hit hard, though these companies have many more problems and their declines have been very gradual. Stein Mart (Nasdaq: SMRT ) and Accuride (NYSE: ACW ), both surged on Thursday 14% and 10%, respectively and I’m hoping their strength continues so I can short right into it! SMRT reported earnings that were pretty terrible, but wall Street was expecting something even more terrible so the stock went up. ACW had no good news, but their stock price had fallen 30% in the past few days and 50% in the past few weeks. They reported pretty crappy earnings a few weeks ago and the price action exemplifies a perfect technical breakdown. That’s chart worthy—see below! But like RCH the other day, this strength is probably temporary and will make for some good shorting. I won’t be too aggressive in my shorting though because these moves could be the beginnings of the bottoming process so I’m just watching for now.
Last, but not least, the only strong stock among all these failures—China Voice Holdings (Other OTC: CHVC), a Chinese telecom, wireless blah blah blah, they keep pumping out PRs every few days kind of play. Supposedly getting audited and moving to a big exchange, I wouldn’t bet against them (look at AOB, yup, some of these plays actually do make it). This one’s surged from 50 cents to $2 in 2 weeks and the move has become rather steep. Probly gonna drop, but I don’t know how I’m gonna play it, considering it’s not shortable–it’s on my watchlist.
And I obviously watching all the other stocks I mentioned earlier in the week, but nothing is looking too worthy of TIM’s hard earned capital. Oooooh, I can’t wait to show you guys some perfect charts, they’ll come around eventually, hang in there!