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Setups – Short Squeeze

Overview

The Setups – Short Squeeze profile highlights stocks with elevated short positioning and favorable technical context for squeeze potential. These setups combine high short float, significant days-to-cover ratios, and AI-validated long structures. By surfacing stocks where shorts are vulnerable to being forced out, this profile focuses on opportunities where price acceleration can be sharp and sustained once momentum triggers.

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This profile is updated in real time and applies filters automatically to surface liquid, high short-interest setups with favorable long bias. It can be used across all market sessions, but is most impactful during periods of strong upward momentum or when catalysts force shorts to cover.

Strategy Focus

  • Identify stocks with high short float and elevated short interest ratios
  • Focus on long setups where squeeze dynamics can drive outsized upside moves
  • Filter for liquidity and volatility to ensure squeezes are tradable and supported by strong price discovery
  • Validate setups using AI-driven structure, risk/reward, and resistance path metrics
  • Incorporate volume and theme context to confirm institutional participation and group alignment
  • Prioritize continuation setups where short covering aligns with technical breakouts and momentum

Filters Applied

The following filters are applied automatically in this profile:

  • Liquidity Rating > 70: Ensures the stock is sufficiently liquid for smooth order execution and reliable price discovery.
  • ATRP 14D ≥ 0.5 and Volatility (Month) ≥ 1: Selects stocks with meaningful price movement and volatility to support squeeze continuation.
  • AI - Alpha Strategy = Long: Only includes setups where the AI has identified a long (bullish) directional bias based on structure and context.
  • AI - Risk/Reward ≥ 2: Ensures a favorable setup where the expected reward is at least double the downside, based on stop and target zones.
  • AI - Path to Target ≤ 1: Limits results to stocks with one or fewer remaining barriers to the AI-defined target, supporting smooth continuation.
  • Short Float (%) > 20: Requires a significant portion of shares outstanding to be held short, creating squeeze potential.
  • Short Interest Ratio > 5: Ensures elevated days-to-cover, indicating shorts may face liquidity challenges if forced to exit.

Together, these filters isolate liquid, volatile setups with elevated short positioning and favorable long bias, primed for potential squeeze dynamics.

Metrics Used

AI Strategy and Setup Quality

  • AI - Alpha Strategy: Displays AI-generated long bias for each setup based on real-time structure
  • AI - Risk/Reward: Estimates reward vs risk using AI-defined stop and target zones, with only 2:1+ setups shown
  • AI - Path to Target: Counts resistance barriers between price and target — limited to one or fewer for clean continuation

Short Interest and Squeeze Risk

  • Short Float (%): The percentage of a company’s tradable shares (free float) that are currently sold short. Commonly used to gauge bearish positioning and squeeze potential if price rises or borrow tightens.
  • Short Interest Ratio (Days to Cover): The number of days it would take short sellers to cover all outstanding short positions, based on average daily trading volume. Helps assess liquidity risk for shorts; higher values imply more difficult/longer covering and greater squeeze risk.

Price Action and Breakout Context

  • Change Pre Market (%): Captures overnight strength that may pressure shorts ahead of the open
  • Change From Close (%): Measures continuation strength during regular session trading
  • RSI Divergence 14 Days: Flags confirmed or unconfirmed RSI divergence from price, signaling potential exhaustion or continuation around squeeze levels
  • Universal Pattern Detection: Identifies technical pattern alignment supporting directional setups

Volume and Liquidity

  • Volume All Hours: Tracks total daily volume across all sessions for liquidity context
  • Relative Volume: Highlights setups trading with unusually high volume at the time of scan
  • Dollar Volume Rank: Prioritizes highly active tickers by capital flow

Sector and Theme Context

  • Industry Rating 1 Day, Theme Rating 1 Day: Show group strength that supports continuation and squeeze pressure
  • Industry Rating 1 Year, Theme Rating 1 Year: Provide long-term macro strength backing the setup
  • Relative Strength 1 Day, Relative Strength 1 Year: Compare short- and long-term price performance relative to peers

Fundamentals and Timing

  • MarketAlpha Rating: Overall strength signal combining technicals, fundamentals, and group factors
  • EPS Rating, Sales Rating, Profit Rating: Show consistent financial performance supporting breakout credibility
  • Accumulation/Distribution Score: Detects institutional buying/selling trends that can amplify or counter squeeze moves
  • 52 Week High (%): Shows proximity to breakout levels that may act as magnets or friction
  • Next Earnings In Days: Displays timing of next earnings event for trade risk planning

Default Sorting Logic

Results are sorted by Dollar Volume Rank (ascending) to surface short squeeze setups in the most liquid and institutionally relevant tickers first. This ensures that highlighted setups not only carry elevated squeeze risk but also have the depth and liquidity required for reliable execution.

Practical Use Cases

  • Spot stocks with high short interest that are primed for sudden upside acceleration once momentum triggers
  • Focus on tickers where short covering aligns with technical breakouts to create fast continuation trades
  • Isolate setups with elevated days-to-cover, where shorts face structural difficulty exiting positions
  • Use squeeze dynamics as a filter to prioritize asymmetric risk/reward long opportunities
  • Combine short interest metrics with volume and liquidity filters to avoid illiquid traps
  • Monitor real-time catalysts and theme strength to confirm whether a squeeze move is supported by broader market flows