Trading short squeezes can be fun and the upside potential is huge. A short
squeeze occurs when a poorly performing stock builds up a large percentage of
traders holding the stock short. When short sellers expect stock to keep
falling, they sell the stock by borrowing it from their broker, and then buy it
back later for a cheaper price. A squeeze is triggered when the stock suddenly
starts to rally and these short sellers have to buy back early to cover losses,
which squeezes (increases) demand for the stock and can accelerate the stocks
rise in price over the near term. Traders can make a killing if they go long a
short squeeze, but keep in mind that these stocks are held short for a reason.
Keep your positions small and make sure you understand the risks of trading
against the trend before you enter a trade like this. Here are four picks we are
watching for potential moves in the very near term. NuVasive, Inc. (NASDAQ: NUVA
) up 2.66% today Skechers USA (NYSE: SKX ) up 7.24% this week Cree, Inc.
(NASDAQ: CREE ) up 4.1% this week China-Biotics Inc. (NASDAQ: CHBT ) up 2.27%
today This article is brought to you by LearningMarkets.com .
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