4 Stocks Ready for a Short Squeeze (GME, OSTK, YELP, Z)

Vader and Fett

We start October with a bang. We review the potential short squeeze plays to make a quick buck

Get ready for the Q4 2012 rally.  There's no time to waste and some quick money could be made by playing popular stocks with heavy short interest. Making the cut are Yelp, Inc. (YELP), GameStop Corp (GME), Zillow Inc. (Z) and Overstock.com Inc. (OSTK).

Investors love to short stocks, there's no better way in a post Lehman Brothers world to bank massive coin when a stock plunges.  When a heavily shorted stock jumps 10%+ on a single day the short sellers must exit.  The stock could jump on headlines, credible news or just because the down trend is finally done. The traders that are short on the given stock then have to liquidate and cover their position by buying back the stock. If enough short sellers buy back the stock, the price is pushed even higher and off to the races we go.

Here are your potential short squeeze trades: YELP, Z, GME, OSTK (see charts below).

Yelp, Inc. (YELP) is loaded down by short interest to the tune of more than 51% of its float.  Yelp trades for $27 a share and has jumped 55% in price since late August. Its been a rocky go for Yelp since its March IPO.  Yelp shares are up 13% since it began trading on the NYSE this past Spring.

Zillow (Z) has a big 38% short float and trades at $41.57 a share.  In 2012 Zillow shares are up 85% thanks to a 'recovering housing market'.  Zillow Inc (Z) shares have traded between $21.22 and $46.86 over the past 12 months. 

GameStop (GME) has a short float of 36.7% and trades at $21.33 a share.  GameStop is trading in the middle of its 12 month range of $15.32 to $26.66.

Overstock.com Inc's (OSTK) shares have a hefty 20.5% short float.  This stock has gone on a tear in the last 6 months jumping over 100%.  Despite trading near the top of its 12 month range this stock always falls victim to the will of day traders.  OSTK can be picked up for $10.58 a share.

4 Short Squeeze Stocks(OSTK, YELP, Z)