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Many analysts use the put/call ratio as an indicator for the sentiment surrounding a stock – increases in put/call ratio indicate a bearish turn in sentiment, while decreases indicate bullishness.

We ran a screen on micro-cap stocks rallying above their 20-day, 50-day, and 200-day moving averages for those seeing significant net increases in shares shorted, a bearish development.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.



Do you think these stocks will keep rallying, or are short sellers correctly predicting a move down? Use this list as a starting-off point for your own analysis.

List sorted by decrease in shares shorted as a percent of share float.

1. FXCM Inc (NYSE:FXCM):
Provides online foreign exchange (FX) trading and related services to retail and institutional customers Worldwide. Market cap of $238.66M. The stock is currently trading at 5.06% above its 20-Day SMA, 19.15% above its 50-Day SMA, and 18.74% above its 200-Day SMA. Shares shorted have increased from 4.25M to 4.83M month-over-month, a change representing 4.06% of the company's 14.28M share float. The stock is a short squeeze candidate, with a short float at 28.66% (equivalent to 16.85 days of average volume). The stock has had a couple of great days, gaining 8.81% over the last week.

2. MELA Sciences, Inc. (NASDAQ:MELA):
Medical Instruments & Supplies Industry. Market cap of $135.14M. The stock is currently trading at 36.19% above its 20-Day SMA, 89.77% above its 50-Day SMA, and 94.87% above its 200-Day SMA. Shares shorted have increased from 2.95M to 3.88M month-over-month, a change representing 3.74% of the company's 24.84M share float. The stock has had a couple of great days, gaining 15.55% over the last week.

3. CVD Equipment Corp. (NASDAQ:CVV):
Designs, develops, and manufactures equipment and process solutions used to develop and manufacture advanced solar, nano electronic components, materials, and coatings for research and industrial applications in the United States and internationally. Market cap of $90.13M. The stock is currently trading at 10.92% above its 20-Day SMA, 5.18% above its 50-Day SMA, and 33.41% above its 200-Day SMA. Shares shorted have increased from 67.66K to 122.90K month-over-month, a change representing 1.43% of the company's 3.86M share float. The stock has had a couple of great days, gaining 23.29% over the last week.

4. MedCath Corp. (NASDAQ:MDTH):
Engages in the ownership and operation of hospitals in partnership with physicians in the United States. Market cap of $283.30M. The stock is currently trading at 1.88% above its 20-Day SMA, 3.93% above its 50-Day SMA, and 2.93% above its 200-Day SMA. Shares shorted have increased from 945.51K to 1.16M month-over-month, a change representing 1.37% of the company's 15.61M share float. The stock has gained 36.96% over the last year.

*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.

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

Source: 4 Rallying Small-Cap Stocks With Sharp Increases In Shares Shorted