The Twitter Squeeze Gets Tighter

Catching the correct side of a short squeeze is like the sweet nectar of the trading gods. There is nothing worse, though, than being caught on the wrong side of the trade. While the Twitter (TWTR) move in December may not have initially begun as a squeeze, it has turned into one. All those folks screaming about valuation have missed a 70% move. Even I think the valuation has run way ahead of price at this stage. While the potential for the company remains, buying on anything other than a technical play makes little sense here.

Predicting reversals in short squeezes is often a losing game. Whether it was Twitter or maybe Tesla (TSLA) earlier or even Netflix (NFLX) prior to that, we've seen that these runs can go for long stretches of time, casting aside valuation and replacing that position with the bodies of run-over shorts. I noticed this morning that Interactive Brokers did not have shares of Twitter to borrow. While the market cap may be large here, the amount of shares available to trade -- the float -- is quite small. If Twitter were smart, it would offer a secondary here at $70, allowing some of the locked-up insiders to sell early rather than at the six-month mark. Not all the shares, of course, but enough to fill current demand and lessen the impact come April....274 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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