Best stocks with high short rates • Benzinga


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The advantage of the market is that you can make money whether the stock is bullish or bearish. Some stocks have surged and it may be too late for a long position. The good news is that some stocks have already peaked and it can be profitable to short them.

Instead of only looking for stocks that have upside potential, you can diversify your portfolio by going short. Several large stocks fell 50% and could offer more downside. High short interest helps traders evaluate short stocks.

The Best High Short Interest Stocks

Several stocks have been volatile and in a downtrend for some time. A trend reversal is also possible. Whether you’re positioning yourself to ride the downtrend or go long, there are a few high interest stocks worth exploring.

Heron Therapeutics Inc. (NASDAQ: HRTX): After surging in the first six months of 2018, Heron’s stock has been trending lower. Its market cap of $858.3 million has led short sellers to target this small-cap biotech stock.

Heron’s short interest is nearly 34%. The number of days to cover from September 2021 to January 11, 2022 varied from 21.3 to 17.6. Heron’s days to cover, released on January 26, 2022, was 18.6. Over the past 52 weeks, investors have seen the stock price drop from $20.45 to $7.79. Given that the stock has been trending lower for several weeks, traders might wonder if it is time for the price to pull back or possibly reverse.

Therapeutic Heron (NASDAQ:HRTX)


7.155 – 7.48


7:38 a.m. – 8:45 p.m.


7.22


101.94M


71.20K/2.08M


745.15M


101.94M


/0%


0.000


89.11M

flashing charging (NASDAQ: BLNKW): Blink shares ranged from January 2018 to November 2020, reaching as low as $1.50. The stock broke out of the range and had an epic bull run, hitting just over $64 in January 2021. Since then, the stock has fallen to $17.93.

The stock has since rallied to $25.70. The question remains: is this a retracement of a downtrend or a reversal? Blink’s days remaining, released on February 9, 2022, was 4.1. Is it possible that the price broke out of a downtrend on the daily chart? Or is it retesting the weekly resistance before further declines?

flashing charging (NASDAQ: BLNKW)


18.2 – 18.2



18.2


0.00K


0.44K/0.00K


0.00K


0.00K


/0%


0.000


0.00K

Beyond Meat Inc. (NASDAQ: BYND): Shares of Beyond Meat closed down 4% on Feb. 16, 2022, after an investment bank cut its stock price target and issued gloomy forecasts for its future. Over the past 52 weeks, Beyond Meat’s stock price has fallen from $183.75 to $53.10. Its cover day ratio published on February 9, 2022 was 5.2.

Whether the stock has more downward movement will depend on whether it breaks support. Currently, the stock price is at a crucial support level held in March 2020. The price has tested this level for several days since January 2022 and failed to break through.

Beyond meat (NASDAQ: BYND)


50.01 – 52.5605


51.88 – 169.76


51.01


63.33M


1.95M/3.66M


3.22B


63.33M


/0%


0.000


53.33M

Overall beam (NASDAQ: BEEM): Investors who bought Beam Global stock in December 2019 saw the price soar over 1,800% over the following year. Since hitting $73.78, Beam Global stock has slipped to $10.19. And it is not certain that the woes of investors are over.

The stock has since rallied to $14.79. Investors will wonder if the rise is just a retracement to $20 before a continuation of the downtrend. With a market cap of just $133.1 million, it’s easy to see why sellers have been targeting this stock.

Overall beam (NASDAQ: BEEM)


12.2401 – 13.22


10.1875 – 56.2999


12.94


8.95M


13.48K/35.27K


110.52M


8.95M


/0%


0.000


7.79M

Arch Resources Inc. (NYSE: ARCH): Investors who bought Arch Resources shares in April 2020 enjoyed a 473% return. The stock has been on an uptrend since the end of 2020, and investors must be wondering how much steam it still contains. Could a retracement of the bull run be imminent, or is the stock close to a reversal?

Arch Resources has a market capitalization of $1.8 billion and the number of days of cover published on February 9, 2022 is 9.7. One of the main catalysts for the positive price development is the company’s earnings.

Arch Resources (NYSE:ARCH)


111.67 – 117.11


39.018 – 125.2478


115.43


15.39M


21.22K/51.93K


1.74B


15.39M


0.5/0.44%


1,300


15.08M

What is a High Short Interest Stock?

A stock with a high short interest is a short stock with a large portion of the stock outstanding. It may even exceed the outstanding amount. The general market sentiment is that a security with high short interest is on a downward trajectory. Most traders believe that high short interest stocks are bearish and should be shorted.

Significant changes in short-term interest rates signal to investors that the stock may be bullish or bearish. Short interest is the number of shares sold short that traders did not close. It is expressed as a number or as a percentage. An increase in short-term interest could signal to traders that the stock has turned bearish. And a drop could mean that a long position is imminent.

Some traders think extremely short interest levels signal a buy position. Short interest is an indicator of market sentiment.

Benefits of a High Short Interest Stock

You don’t have to wait for buy signals only, because shorting a stock is also an opportunity for profit. High short-term actions offer several advantages to both bullish and bearish traders.

Indicates market sentiment: Traders use market sentiment to gauge the potential direction of stocks. A significant increase or decrease in a stock’s short interest serves as an indicator of market sentiment for investors.

An increase in a stock’s short interest from 20% to 30% usually means that the market has become more bearish on the stock. In such cases, an additional 50% of investors believe the stock’s value will decline.

Allows you to bet against the market: When market sentiment is bearish, some traders believe it is a buy signal. Their feeling is that extreme short interest is a contrarian indicator. Stocks with extremely short yields are prone to short cuts – triggering a rapid rise in price as many short sellers hold positions.

When a short squeeze occurs, many short traders buy back the stock to cover their positions and avoid losses. This action can push the price even higher.

Fast entry and exit: You can convert short interest to a days-to-cover ratio, which is the number of shares short divided by the average daily trading volume. This calculation gives you the average number of days for the shorts to cover their position.

The higher the number of days to hedge, the greater the bearish sentiment. A low number of days to cover means that bearish traders have a short period to cover their positions. Short interest guides traders on how long to hold their positions and allows them to spot trades they can enter and exit quickly.

Disadvantages of a high short interest investment

Go in investments with high short interest does not guarantee profits because market sentiment is bearish and short interest in a stock is high. These stocks can go up in value.

No opportunities to go long: Traders who successfully use short interest to take profitable bearish trades tend to stick to short positions. They are drawn to the profits from shorting stocks and tend to seek out short trades primarily.

This potentially results in a loss of profit on any long trades they might have entered. Traders should look for buying and selling opportunities.

Stocks are volatile: Stocks that have been in a downtrend for a while could reverse quickly. They are subject to short pressures and can explode. Some traders use the short interest exchanges release monthly, so the information is slightly outdated. Real-time short-term interest could differ significantly from reports.

Should you buy stocks with high short interest?

It is not uncommon for stocks with high short interest to be in a short position, triggering a rapid rise in price as many short sellers hold positions. Traders use short interest to gauge market sentiment. And some traders see high short interest as a potential buy signal.

Short traders may be forced to liquidate and hedge their positions by buying the stock. If many short sellers buy the stock, the price could skyrocket. The difficulty lies in predicting such a position. When short-term interest in certain stocks reaches extreme highs, some traders believe this is a strong buy signal.

Most Shorted Stocks

Whether a stock has high volatility or has been in a downtrend for some time, certain stocks tend to be shorted the most.

Some of the best-selling stocks:

  • Gitlab Inc. (NASDAQ: GTLB)
  • Allbirds Inc. (NASDAQ: BIRD)
  • Cortexym Inc. (NASDAQ: CRTX)
  • flashing charging
  • gogo inc. (NASDAQ:GOGO)
  • Cassava Sciences Inc. (NASDAQ: SAVA)
  • EVgo inc. (NASDAQ:EVGO)
  • Arcimoto Inc. (NASDAQ: FUV)
  • Intercept Pharmaceuticals Inc. (NASDAQ: CIPT)
  • Shift Technologies Inc. (NASDAQ: SFT)

Gitlab’s previous short interest was 34.76% and is currently 62.19%. This is a significant increase in short positions. But traders must use other metrics and charting tools to determine their positions. Short interest is useful, but it’s most powerful when combined with other strategies. A complete list of best-selling stocks is available on Benzinga.


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