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8 Stocks Ready For A Short Squeeze

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August 23, 2010 – Comments (0) | RELATED TICKERS: CADX , CALM , ESC

Below are a list of small-cap stocks that have been heavily shorted by the street, and should the market or the individual stock start rallying, could really see its share price launch into the stratosphere because of the bears being forced to cover their short positions in the stock. Based on the number of shares that are being borrowed, for some of these stocks, it could take as many as 60 days to cover all the shares held short in the stock.

One stock that is already showing that the squeeze has begun is CADX, up over 4% on a flat day, with no news driving the stock, which I also recommended on 7/26 when I last ran this screen. At that time it was only at $7.24. Now it at $8.24.

If you don't know what a short squeeze is, that is where a stock starts to rise rapidly, and as the trend continues to escalate, the short sellers will likely want out. For example, say a stock rises 5% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.

Here's the list of 8 Stocks.

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