Squeeze Ideas: 7 Highly Shorted Stocks Seeing Strong Buy Volume Accumulation

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 |  Includes: AXL, DGI, ENER, ILMN, NOVL, PHH, TTEC
by: Kapitall

It's often suggested that “volume precedes price”, and for that reason it's always helpful to look at the Money Flow Index (MFI), which is essentially a volume-weighted version of the popular Relative Strength indicator (RSI).

Here we present seven stocks that have seen bullish MFI convergence over the last five days. These stocks have also seen an increasing number of shorts month-over-month.

MFI is a more rigid indicator because it is volume-weighted, and is therefore a good measure of the strength of money flowing in and out of a stock. It compares "positive money flow" to "negative money flow" to create an indicator that can be compared to price in order to identify the strength or weakness of a trend.

It can be very useful to compare changes in the MFI indicator to the changes in a stock's price, since diverging patterns are often interpreted as trend reversals.

That said, no indicator should be used in isolation--use this list as a starting point for your own analysis.

All of the stocks mentioned below have seen prices decline over the last week, but the MFI(14) indicator has shown strong improvement--suggesting that these stocks are being accumulated at current levels. Full details below.

MFI(14) values sourced from StrategyDesk, short data sourced from Yahoo! Finance, all other data sourced from Finviz.



List sorted by change in MFI(14) index over the last five days.

1. PHH Corporation (NYSE:PHH): Credit Services Industry. Market cap of $1.19B. Latest close at $21.16 vs. a close at $21.45 five days ago (-1.35% change). MFI(14) index at 23.37 vs. MFI(14) index at 13.97 five days ago (67.29% change). Shares shorted have increased 1.01% month-over month (from 9.90M shares shorted to 10.00M shares shorted). The stock is a short squeeze candidate, with a short float at 17.93% (equivalent to 11.85 days of average volume). The stock has performed poorly over the last month, losing 15.93%.

2. Energy Conversion Devices, Inc. (NASDAQ:ENER): Semiconductor Industry. Market cap of $116.60M. Latest close at $2.19 vs. a close at $2.24 five days ago (-2.23% change). MFI(14) index at 16.17 vs. MFI(14) index at 10.97 five days ago (47.40% change). Shares shorted have increased 1.92% month-over month (from 11.97M shares shorted to 12.20M shares shorted). Short float at 23.04% (equivalent to 7.03 days of average volume), implying the stock is a short squeeze candidate. The stock is currently stuck in a downtrend, trading 30.15% below its SMA20, 43.38% below its SMA50, and 51.53% below its SMA200. It's been a rough couple of days for the stock, losing 7.59% over the last week.

3. TeleTech Holdings Inc. (NASDAQ:TTEC): Business Services Industry. Market cap of $1.03B. Latest close at $18.01 vs. a close at $18.24 five days ago (-1.26% change). MFI(14) index at 34.04 vs. MFI(14) index at 23.23 five days ago (46.53% change). Shares shorted have increased 2.19% month-over month (from 821.21K shares shorted to 839.17K shares shorted). The stock has performed poorly over the last month, losing 19.35%.

4. DigitalGlobe, Inc. (NYSE:DGI): Aerospace/Defense Industry. Market cap of $1.34B. Latest close at $28.86 vs. a close at $29.11 five days ago (-0.86% change). MFI(14) index at 29.43 vs. MFI(14) index at 22.51 five days ago (30.74% change). Shares shorted have increased 2.96% month-over month (from 944.06K shares shorted to 971.97K shares shorted). The stock has gained 12.58% over the last year.

5. Novell Inc. (NASDAQ:NOVL):
Security Software & Services Industry. Market cap of $2.03B. Latest close at $5.78 vs. a close at $5.80 five days ago (-0.34% change). MFI(14) index at 34.77 vs. MFI(14) index at 27.13 five days ago (28.16% change). Shares shorted have increased 18.05% month-over month (from 4.21M shares shorted to 4.97M shares shorted). The stock has lost 2.7% over the last year.

6. Illumina Inc. (NASDAQ:ILMN): Biotechnology Industry. Market cap of $8.06B. Latest close at $63.18 vs. a close at $63.66 five days ago (-0.75% change). MFI(14) index at 33.12 vs. MFI(14) index at 30.94 five days ago (7.05% change). Shares shorted have increased 2.75% month-over month (from 10.20M shares shorted to 10.48M shares shorted). After a solid performance over the last year, ILMN has pulled back during recent sessions. The stock is 3.58% below its SMA20 and 7.33% below its SMA50, but remains 14.6% above its SMA200.

7. American Axle & Manufacturing Holdings Inc. (NYSE:AXL): Auto Parts Industry. Market cap of $931.61M. Latest close at $12.64 vs. a close at $12.79 five days ago (-1.17% change). MFI(14) index at 32.20 vs. MFI(14) index at 30.53 five days ago (5.47% change). Shares shorted have increased 1.81% month-over month (from 9.94M shares shorted to 10.12M shares shorted). This is a risky stock that is significantly more volatile than the overall market (beta = 2.43). The stock has gained 12.77% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.