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How do you know when a winning streak is nearing its end? It's impossible to say, but there are many helpful signals investors can use. One of them is pessimism from short sellers. We created a list with this in mind.

We started by looking for stocks on winning streaks. For our purposes, a winning streak is measured by a persistence of days in which the stock outperformed the S&P 500 and little persistence of days in underperforming the index. We measured this by the ratio of the longest winning streak (in days) divided by the longest losing streak over the last month.

This is good for a stock, but can the winning streak last? We looked for signals the streak is coming to an end by examining short seller activity. Specifically, we looked for significant increases in shares shorted month over month.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research. (click to enlarge)

Tool provided by Kapitall.

Do you think these stocks will continue to win, or are short sellers right to be pessimistic? Use this list as a starting point for your own analysis.

List Average 1-Year Return: 187%

1. Affymax, Inc. (OTCPK:AFFY): Engages in the development of drugs for the treatment of serious and life-threatening conditions. Market cap at $762.16M, most recent closing price at $21.06. Shares shorted have increased from 5.28M to 5.82M over the last month, an increase which represents about 1.74% of the company's float of 31.09M shares. Days to cover ratio at 6.3 days. The stock's average daily alpha vs. the S&P 500 index stands at 0.79% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e. the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 1 day (i.e. a win streak / losing streak ratio of 5.).

2. CVR Energy, Inc. (NYSE:CVI): Together with its subsidiaries, refines and markets transportation fuels in the United States. Market cap at $3.19B, most recent closing price at $36.75. Shares shorted have increased from 2.74M to 3.10M over the last month, an increase which represents about 2.47% of the company's float of 14.59M shares. Days to cover ratio at 9.13 days. The stock's average daily alpha vs. the S&P 500 index stands at 0.97% (measured close to close, over the last month). During this period, the longest winning streak lasted 8 days (i.e. the stock's daily returns outperformed the S&P 500 for 8 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 4.).

3. Infinity Pharmaceuticals, Inc. (NASDAQ:INFI): Engages in the discovery and development of medicines for the treatment of cancer and other conditions in the United States. Market cap at $765.72M, most recent closing price at $23.51. Shares shorted have increased from 2.52M to 2.92M over the last month, an increase which represents about 3.03% of the company's float of 13.19M shares. Days to cover ratio at 9.13 days. The stock's average daily alpha vs. the S&P 500 index stands at 1.3% (measured close to close, over the last month). During this period, the longest winning streak lasted 6 days (i.e. the stock's daily returns outperformed the S&P 500 for 6 consecutive days). The longest losing streak lasted 1 day (i.e. a win streak / losing streak ratio of 6.).

4. Nationstar Mortgage Holdings Inc. (NYSE:NSM): Designs, develops, manufactures, and markets analog and mixed-signal integrated circuits and sub-systems. Market cap at $2.96B, most recent closing price at $33.18. Shares shorted have increased from 3.24M to 3.56M over the last month, an increase which represents about 1.68% of the company's float of 19.07M shares. Days to cover ratio at 3.9 days. The stock's average daily alpha vs. the S&P 500 index stands at 0.84% (measured close to close, over the last month). During this period, the longest winning streak lasted 8 days (i.e. the stock's daily returns outperformed the S&P 500 for 8 consecutive days). The longest losing streak lasted 3 days (i.e. a win streak / losing streak ratio of 2.67).

5. Office Depot, Inc. (NASDAQ:ODP): Together with its subsidiaries, supplies office products and services. Market cap at $730.01M, most recent closing price at $2.56. Shares shorted have increased from 28.95M to 32.57M over the last month, an increase which represents about 1.51% of the company's float of 239.09M shares. Days to cover ratio at 5.8 days. The stock's average daily alpha vs. the S&P 500 index stands at 2.71% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e. the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 2.5).

6. Sunesis Pharmaceuticals Inc. (NASDAQ:SNSS): Focuses on the development and commercialization of oncology therapeutics for the treatment of solid and hematologic cancers. Market cap at $265.17M, most recent closing price at $5.63. Shares shorted have increased from 3.34M to 3.56M over the last month, an increase which represents about 1.11% of the company's float of 19.76M shares. Days to cover ratio at 4.56 days. The stock's average daily alpha vs. the S&P 500 index stands at 3.18% (measured close to close, over the last month). During this period, the longest winning streak lasted 4 days (i.e. the stock's daily returns outperformed the S&P 500 for 4 consecutive days). The longest losing streak lasted 1 day (i.e. a win streak / losing streak ratio of 4.).

7. Sealy Corporation (ZZ): Together with its subsidiaries, manufactures and markets various bedding products. Market cap at $226.87M, most recent closing price at $2.18. Shares shorted have increased from 13.99M to 17.63M over the last month, an increase which represents about 12.73% of the company's float of 28.60M shares. Days to cover ratio at 15.67 days. The stock's average daily alpha vs. the S&P 500 index stands at 1.41% (measured close to close, over the last month). During this period, the longest winning streak lasted 8 days (i.e. the stock's daily returns outperformed the S&P 500 for 8 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 4.).

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

Source: Contrarian Ideas: 7 Stocks On Winning Streaks With Significant Short Increases