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To: Platter who wrote (1218)3/3/1999 9:54:00 AM
From: Platter  Read Replies (1) | Respond to of 1932
 
from SmartMoney..March 2, 1999
The Squeeze Is In
By Paul R. La Monica

SHORT SQUEEZE

ARE YOU a predator? Do you delight in the misfortune of others? Then we've got the investment strategy for you. It's called the short squeeze, and here's how it works.

You know that short sellers sell borrowed shares in anticipation of a stock's decline. Then, once the stock has dropped, they pocket a profit by repurchasing the shares at a lower price. Well, in a short squeeze, the bulls turn the tables on the bears by buying huge amounts of a stock targeted by short sellers. This drives up the price, forcing the nervous shorts to cover their positions. This so-called short covering sends the stock up even further. The bulls then sell, pocketing a profit, while the shorts go home licking their wounds.

Now, we're not recommending that you buy heavily shorted stocks willy-nilly. But, if you can find a stock with strong fundamentals and a large short position, you just might get some added lift from a short squeeze.

excerpt.