Tutorial-Prefered Stocks to Own

[Ken]

Hi Mike,

Thank you for all the valuable lessons! In your experience, does short interest provide any clues into the quality of a breakout for the BIG STOCK leader ? The underlying thought is that breakout candidate with higher short interest have additional "fuel" from the potential short covering. However, high short interest candidates could potentially be "perceived" by the market as having potential weakness, thus higher probability of breakout failures. I guess it would have to be taken into context of the broader market actions but I'm wondering if all other criterias being equal, would SI ranking provide any edge for candidate selection that you've observed ?

Best,
Ken

[Mike]

Hi Mike,

Thank you for all the valuable lessons! In your experience, does short interest provide any clues into the quality of a breakout for the BIG STOCK leader ? The underlying thought is that breakout candidate with higher short interest have additional "fuel" from the potential short covering. However, high short interest candidates could potentially be "perceived" by the market as having potential weakness, thus higher probability of breakout failures. I guess it would have to be taken into context of the broader market actions but I'm wondering if all other criterias being equal, would SI ranking provide any edge for candidate selection that you've observed ?

Best,
Ken

Ken,
Short interest at the right time I believe does make a difference. Short players can be a savvy group but also can be very wrong. When the market is advancing and is generally looks healthy high short interest at a base pivot or buy point can indeed be fuel to start a breakout and propel a stock higher. It is a short term phenomena however but useful.

Mike Scott
Tarzana, CA