Short Squeeze
A short squeeze is a rapid increase in the price of a stock caused when sellers that are in positions take profit.

 

Characteristics

A downward trend is occurring. It hits a level that seems important such as a whole number or area of support. There is a bump in the trend and for a moment the trend looks like it will turn around but then it continues down.

 

Confirmation

Confirmation occurs when the downtrend continues.

 

1. The end of the day often causes a short squeeze.

 

2. Sometimes a short squeeze will take you out of a stock and then continue to go down. Expert traders often buy back just half their position to take profit and wait for further confirmation before acting on the rest.