Look at First Solar (FSLR)'s chart below which shows a strong rally due to a short squeeze of epic proportions back in April 9.
The 40 million volume traded, with a stock price spike from $26 to close to $40, send short-sellers running for the exit. It also helped push the entire solar sector north, due to FSLR releasing a higher-than-expected full-year financial target and announcing that it will acquire a high-efficiency module company.
So how do we spot these potential huge short squeezes before everyone does? One method is to sieve for stocks with a short interest ratio of more than 8x. As Jim Chanos asserted, a short interest ratio typically above 8x is a heavily shorted stock.
Look at the table below with the said candidate of stocks as potential longs. As of April 18, 2013, Overstock.com (OSTK) had spiked 37% in just one day!
Check back on my website for more details on how to get the more than 1,700 heavily shorted stock list.
Note: This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer to buy or sell any securities.