Beat Fear With a Single Factor

The world is a scary place for investors right now... [Chaikin PowerFeed]( Beat Fear With a Single Factor By Marc Gerstein, director of research, Chaikin Analytics The world is a scary place for investors right now... [Russia's war in Ukraine continues](... Inflation is at a multidecade high... We're still seeing supply-chain shortages... And the Federal Reserve is raising interest rates. With all of that uncertainty in mind, it's tempting to bet against the market. But in reality... it makes more sense to do the exact opposite. You see, investor "fear" is increasing. But as I'll show you today, we can use this shift in sentiment to our advantage. We can beat investor fear and profit at the same time... Recommended Links: [Stock Warning: 90 Days to Move Your Money]( It doesn't matter if you have money in the markets right now or are waiting on the sidelines. The short period we are about to enter could have the power to make – and destroy – fortunes. And what you do in the next 90 days could determine your financial success for the next decade. [Here's what's happening and how to prepare](. [BUY ALERT: No. 1 EV Stock for 2022]( He called the 2009 rally in stocks, the rise of bitcoin in 2014, and last year's COVID-19 rebound. And now, Matt McCall says his newest hypergrowth EV stock recommendation could be his NEXT 1,000% winner. It's a little-known company that doesn't make cars, parts, or even batteries. Yet, what the company has created is far more powerful and vital. [Click here for the full EV story](. Simply put, we're looking for stocks that deserve better treatment than they're getting from the market. In other words, we want to find stocks that a lot of investors are betting against. To uncover them, we'll use a factor called "short interest." Short interest is simply the measure of investors betting against a stock. And importantly, stocks with high short interest have the potential to pay out huge gains. It has to do with the infamous "short squeeze" and how the stock's price can change when fear unwinds. When you buy a stock, you can hold it as long as you want. You own your shares. So you can choose to close your position tomorrow, next month, or 30 years from now. But generally speaking, short sellers don't have this privilege... That's because most investors open short positions with loans from a brokerage firm. You've likely heard this referred to as "margin." That's where things get interesting... Short positions are capable of infinite losses. No kidding. That's because no limit exists on how high their prices can go. As a result, it's critical to the firm that a loan on a short position doesn't get out of control. So the firm will decide to close short trades for investors who are in over their heads. To close these trades, the firm can liquidate an investor's assets and buy back the stocks that the investor has shorted. Obviously, that's the extreme scenario. It isn't how every case plays out. But it does happen every day across every brokerage firm that offers margin to short sellers. And by the way, it's not just mandatory "buying and covering" short positions. Short sellers could also look at a rising stock and voluntarily decide to buy shares to reduce or close (cover) their short positions. If this happens to enough short sellers of a single stock at the same time, the buying and covering can result in a "short squeeze" rally. Now, let's put this knowledge to use... First, we want to identify stocks with high short interest. A couple of examples will help us understand what we're looking for... Consumer-electronics giant Apple (AAPL) currently has 108.9 million shares sold short. That might sound like a lot. But in reality, it's trivial compared to the total number of shares outstanding (16.3 billion). That means only 0.7% of AAPL shares are sold short today. Meanwhile, shipping company Eagle Bulk Shipping (EGLE) has far fewer shares sold short right now – a mere 1.25 million. But importantly, the company only has 13.6 million shares outstanding. So short interest in the stock is much higher... It's at roughly 9.2% today. This sort of information is available on most financial websites. But I prefer to simplify my burden using the "short interest" factor within our Power Gauge system... It crunches the numbers and immediately tells me whether a particular percentage is benign or noteworthy. The Power Gauge ranks Apple as "very bullish" in the short interest factor. That tells us it's benign. And Eagle Bulk Shipping's short interest rank is "very bearish." That tells us it's noteworthy. So we know the short interest in Eagle Bulk Shipping is noteworthy. Next, we want to evaluate the opportunity. We can do that in many ways. But once again, I turn to the Power Gauge... The Power Gauge gives Eagle Bulk Shipping a "very bullish" overall rating today. That alone tells us the stock deserves more respect right now than the short sellers are giving it. In other words, it's a showdown between the "very bearish" grade for short interest and the other 19 Power Gauge factors that combine to produce a "very bullish" overall rating. Investor fear is on the rise. But importantly, we can use it to our advantage. When a stock has high short interest but looks attractive overall, it could create a big profit opportunity. That's the case with Eagle Bulk Shipping right now. And it's an opportunity that you should consider. Good investing, Marc Gerstein Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.81% 10 17 3 S&P 500 -1.24% 118 314 64 Nasdaq -2.22% 14 73 12 Small Caps -2.31% 258 1111 509 Bonds -2.26% — According to the Chaikin Power Bar, Small Cap stocks are more Bearish than Large Cap stocks. Major indexes are mixed. * * * * Top Movers Gainers [rating] ZBH +2.63% [rating] CCL +2.43% [rating] SJM +2.33% [rating] CCI +2.13% [rating] HOLX +2.05% Losers [rating] MKTX -10.97% [rating] MPWR -7.41% [rating] CDAY -6.37% [rating] MRNA -6.08% [rating] AMAT -5.97% * * * * Earnings Report Reporting Today Rating Before Open After Close RPM No earnings reporting today. Earnings Surprises [rating] AYI Acuity Brands, Inc. Q2 $2.57 Beat by $0.20 [rating] NG NovaGold Resources Inc. Q1 $-0.03 Met estimate * * * * Sector Tracker Sector movement over the last 5 days Utilities +1.97% Staples +0.61% Real Estate +0.08% Communication -0.45% Health Care -0.62% Energy -0.85% Materials -1.39% Information Technology -3.28% Discretionary -3.44% Industrials -3.93% Financial -4.28% * * * * Industry Focus Oil & Gas Exploration & Production Services 39 18 0 Over the past 6 months, the Oil & Gas Exploration & Production subsector (XOP) has outperformed the S&P 500 by +29.90%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #1 of 21 subsectors. Top Stocks [rating] PSX Phillips 66 [rating] TALO Talos Energy Inc. [rating] XOM Exxon Mobil Corporat * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. [www.chaikinanalytics.com.]( Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.