Two stocks that could deliver explosive gains this week

If you’ve been with me for a while, you know that my SCAN algorithm looks for all kinds of unusual option activity. It helps me make recommendations for my subscribers.

But I recently made some changes to it that make it watch for what I think are the two most predictable indicators of a potential short “super squeeze” about to explode.

That usually means a short-selling Wall Street hedge fund is in hot water, but for ordinary investors smart enough to be on the “other side” of a jam, these situations can be hugely lucrative.

You may find yourself holding a stock that is suddenly in a strong uptrend.

I usually share a watch list with mine Super Squeeze Winnings Each week readers of the stocks SCAN has found as potential winners – I give them specific trade research recommendations.

The hunt is looking really good this week and I want to share a few of these names with everyone…

Why Super Squeeze situations happen

Most people, when they think a stock will go up, go up and buy the stock. When they enter the trade, they can trade call options. On the other hand, if they think a stock will go down, most people would buy put options and go short.

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Well, there’s “short selling” and “short selling” — something that many regular investors and traders don’t do very often because the risk is theoretically unlimited. Because of this risk, it is usually a game for large institutional investors; High margin requirements and/or really deep pockets may be required.

I’m oversimplifying here, but basically a short seller will go out and borrow the stock in hopes that it will go down in price. When it’s time to “give back” the shares, they pocket the difference as profit.

But like I said a second ago, short sellers can find themselves in hot water. It’s really easy for short sales to go wrong in a hurry. Big hedge funds have been in big trouble lately, as we saw at GameStop Corp. (NYSE: GME).

When there is significant upside pressure on a stock, these short sellers must quickly “cover” their positions — they cover by buying the stock, which drives the price further up, forcing other short sellers to cover and buy, what drives up the price, what attracts other buyers with “FOMO”, what drives up the price…

Everyone has a different pain point, and not every short seller will duck at the first sign of a buy – some hedge funds covered their GameStop shorts at $90, others significantly higher – but sooner or later, when a “super squeeze” breaks out, they will all cover and buy.

So, as you can see, a “super squeeze” is a rapid buying spiral; a chain reaction. And of course, if you’re long at the start, you can bag big, quick wins from these types of events.

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And if you trade the right options on the stock, those gains can potentially be extraordinary.

Some of this week’s top Super Squeeze contenders

SCAN has found several likely candidates for big future wins, and as I said before, I’ll give my readers some specific recommendations on them.

But I would encourage everyone to keep an eye on these – pay attention to the movements that can signal a squeeze deployment.

Macerich Co. (NYSE: MAC) – this is a Real Estate Investment Trust (REIT), and a really big one at that. In fact, it is the third largest owner and operator of shopping malls in the United States. The short sellers here are almost certainly feeling some lingering weakness from the pandemic era and are hoping to capitalize on that weakness, but I think – and SCAN agrees – that’s the way it is waaaay too late for that. I think this REIT could rally higher and far outperform the recovery that is currently taking place.

We look at each other too Nautilus Inc. (NYSE: NLS). That’s a classic name if you’re into fitness — it makes Bowflex, Nautilus, Octane, and Schwinn fitness equipment. This niche has performed extremely well during the “stay-at-home” phase of the pandemic, but like many other “pandemic stocks,” NLS is down more than $10 from its February highs — Wall Street wants benefit from it. What they don’t seem to know is that I don’t think this stock needs to fall any further; From here it looks like an all upside situation that would absolutely destroy the short sellers at these levels.

You can go right here to learn how to get all mine Super Squeeze Winnings Research and recommendations every week. You can see for yourself how individual investors turned the tables on Wall Street and why many ordinary people think the Super Squeeze is the hottest trade on the market right now.

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About the author

Andrew Keene is a world-renowned trader and a renowned options expert.

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