Are you watching this short squeeze in Rockwell Med (RMTI)? (July 07, 2015)
I want to look at RMTI ( NASDAQ:RMTI ), that’s why we’re looking at this chart. This has a massive short interest; it’s going to take almost 20 days to cover. A lot of the float is short; I think 25 percent or so. What you’re seeing here is, in my view, some short covering; this is the freak out here. I would want to be long this stock because there are few things in life that I like more than a short squeeze, which tells you a lot about the level of interest in my life, the level of fun I should say.
Anyway, this stock is just drifting higher, it’s not selling off, I think what’s happening is, the shorts are just kind of gradually capitulating. The problem is that things don’t quite always work out that well and shorts aren’t often let out of their trade gracefully. This company does not report earnings until the end of July, not till the end of July. There have been some earnings revisions and they’ve all been upward and that’s helped.
So here’s my suggestion, you look at this stock, look at it on the weekly chart you can really see this squeeze. These kinds of things scare the snot out of me, when every single week the close is way above the upper Bollinger Band; that is a strong stock. But it’s not so scary if you just trade with some control. You don’t pile in; you don’t assume that the stock is going to continue to go to $30.00.
Instead you respect the power of the bulls, you respect the power of the bears, you manage your risk, you take some stock, 16.65. Lets do it this way, I’ll give you a real easy way, the 20-day, lets see what 10 looks like, yes, 10, so you set your moving average to 10; lets go really nuts and go exponential.
So you set a 10-day exponential moving average, you stay long this stock, if the stock starts closing below the 10-dat exponential moving average then it has changed, then this characteristic has changed and you don’t want to be long this stock. But until that happens, being long Rockwell ( NASDAQ:RMTI ) is not a bad place to be. Just again, use stops don’t take this for granted but I think this is a short squeeze that is going to continue.
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