Markets remain in an up-trend. Adding to QLD. QCOR, which I wrote about in June, had a nice day on Monday, up 14.75%. Check out this monthly chart, where the green lines show the tops of each base. QCOR, which came up in my Darvas Scan, recently broke out of its latest base. Click on chart to enlarge.
what is your take on QCOR adjusting back down today? Too volatile, or the overall trend still looks good?
My rule of thumb is to start being a bit extra cautious about entering a long position in a stock whenever its short percentage is above 15%. And with QCOR having a whopping 37% short interest the thinking goes like this: That ultra high short interest percentage is telling you that it’s not Aunt Jane who is shorting the stock, it’s some serious money, folks who know something that the rest of us little retailers don’t know. QCOR’s float of 50 million shares is telling also, as it makes the serious money professionals’ high short stake more legit, i.e. a float of 5 million shares for example on stock XYZ’s price of $3 could easily be highly shorted a small handful of rich retailers with too much time on their hands. Bottom line, I don’t care how highly rated any stock is by experts, IBD, gurus…an untra high short interest raises a big red flag. Yes, a big short squeeze cuts both ways, and in those cases it’s not reasoned speculation when you enter into such position, it’s gambling.