On September 28th, we recommended to buy shares in Visa (V) in our publication Good Morning Wall Street. Why? Pretty simple as short sellers are back again.
Short sellers are back again and they never make money. We will keep playing this until it actually loses money. We like Technology: Software as the sector is doing decent this year, ranked 13th out of 24 sectors . Visa is currently between Shorts Correct (Type 3) and a Short Squeeze (Type 1) in our work. This get us excited as there is nice upside if it gets to a Type 1. Our recommended price was $231.78 and it closed yesterday at $233.48.
The Erlanger Short Intensity Rank is at 82%. Historically, when the intensity is high, as it is now, the shorts get squeezed 100% of the time and this is a new position. On average when squeezed, they lose 21.90% in this name which means 21.90% upside. So as the pain increases, they will close their position causing the stock to move higher.
Our first level to clear is $240. Once there we will highlight our next level. The stock peaked this summer at $250.06 so there is nice upside. We recommended this last fall and made 9% by January so this is almost a repeat of last year.