Seeing as the rally has not been faded, there stands to be a good chance that shorts will cover into the close. Below, you will find the top ten short squeeze plays from my favorite custom screen in The PPT, identifying stocks with large short positions and other factors lending themselves to a big squeeze. Subscribers can click here to see the full screen, toggle the parameters, and/or save it.

Click on image below for full size.

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I alerted 12631 members last evening to the fact that Corinthian Colleges had been registered by The PPT algorithm as having an oversold hybrid score (combination of many technical and fundamental factors). Historically, COCO has had phenomenal results in the following trading sessions after the hybrid oversold reading.

Of course, the for-profit education plays have been severe laggards to the broad market over the past few years. When you combine that glaring underperformance with the omnipresent regulatory risks, it is easy to see why many traders have sworn off these names as simply being untradable.

Much like the solars and LED plays, the for-profits have been drama queen teases. However, putting the taboo to one side is the essence of objectivity, and we know that many of these for-profit education stocks have enormous short positions in them consisting of bears looking to ride these firms down to $0/share. Therefore, it follows that unless the straight-line-to-zero-express has not only left the station but is close to its destination, there are bound to be some excellent trading opportunities on the long side.

Looking at the daily chart of the heavily-shorted COCO, we know by now that the stock has been in a seemingly perpetual downtrend. Recently, a high volume buy spike on the back of perceived easing of regulations showed just how powerful a short squeeze can be in a hated stock and sector. After a low volume pullback the past few days leading to The PPT hybrid oversold score, a close above $4.74 would give back the initiative to the bulls to press the squeeze.

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Tortoise Energy Infrastructure Group (TYG), a closed-end equity mutual fund, has been registered by The PPT as having an oversold technical score. Before I get to the statistics, it is also worth noting that the stock closed clearly below its lower daily Bollinger Band. Now, that fact alone is not a reason to get bullish on an oversold stock. However, when you combine that technical analysis with the data below, you will see that going long TYG is a high probability trade here (I currently have no position). After previous times when TYG registered a technical oversold score by The PPT algorithm, the stock has been consistently higher five, seven, and even ten trading sessions out.

Here are the statistics to support that statement.

5 Day – Avg Return	3.45
5 Day – Times Up	7.00
5 Day – Times Down	1.00
5 Day – # Signals	8.00
5 Day – % Times Up	87.50
7 Day – Avg Return	3.86
7 Day – Times Up	8.00
7 Day – Times Down	0.00
7 Day – # Signals	8.00
7 Day – % Times Up	100.00
10 Day – Avg Return	3.58
10 Day – Times Up	8.00
10 Day – Times Down	0.00
10 Day – # Signals	8.00
10 Day – % Times Up	100.00

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Seasonality

Month Avg % Return Total # Months # Months UP # Months DOWN January 1.529 17 6 (35.29%) 11 (64.71%) February 2.685 18 10 (55.56%) 8 (44.44%) March -3.412 19 6 (31.58%) 13 (68.42%) April -0.773 19 5 (26.32%) 14 (73.68%) May -0.86 18 9 (50%) 9 (50%) June 2.801 18 12 (66.67%) 6 (33.33%) July -0.347 16 5 (31.25%) 11 (68.75%) August 0.045 17 8 (47.06%) 9 (52.94%) September 0.456 17 8 (47.06%) 9 (52.94%) October 2.048 18 9 (50%) 9 (50%) November 1.094 17 8 (47.06%) 9 (52.94%) December 2.516 14 8 (57.14%) 6 (42.86%)

As you can see above, courtesy of The PPT service here on iBankCoin, Nathan’s Famous (NATH) typically performs best during the month of June. We know that the firm sponsors that famous hot dog eating contest every July 4th over on Coney Island, and that hot dog consumption is likely to increase during the primetime outdoor barbecue summer months. Moreover, the price action in the stock has been impressive of late.

With that said, this is a thinly traded stock, so please be careful with regard to market orders and blasting in big buys all at once. However, there is a case to be made here that Nathan’s is a good play for patient traders who are willing to build a swing position slowly.

Full Disclosure: I have no position in Nathan’s Famous (NATH) at the time of this writing.

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Many of the heavily shorted for-profit education plays are seeing massive gaps higher on a softening of prior tough regulation. Most are already too far away from proper entry points in order to swing, but some are still set up, such as $ARCL and even $REVU. Moreover, this could be the shot across the bow signaling a long-term change in trend for these obvious laggards.

For your reference, here is The PPT listing of all stocks in the education industry, sorted by technical scores. Click on image for larger size.

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Since  Analyst Bomber aka “robert” inside The PPT remains too humble to do the ten million victory laps he should be doing, I thought I would point out the excellent series of calls he has made about AMSC. The stock is cratering, down 20% today, but it has been sick for quite some time.

Here is a timestamped call (one of many) that he made about AMSC in early April inside The PPT.  Actionable, information, entertaining–and RIGHT. That’s the iBankCoin way.

robert wrote: 4/5/2011

4:20 PM

@ $24.87

“Well that kills the second post I was going to do here. Piggy is roasted on credibility, potentially cooked books, and not enough cash to support the new acq, which is now likely in jeopardy. It is a race to something between $8 and $10.”