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by Steven Magallanes
Tuesday, June 4, 2024
π¦ 3 Stocks with Fast Upside Potential Due to High Short Interest
Whenever stocks reach a higher than usual short interest, investors could benefit from keeping a close eye on the future prospects for those stocks. Typically, there is a good reason for short sellers to take on a bearish view of businesses. However, like bullish sentiment, bearish sentiment can get out of hand. A saga like GameStop Corp. (NYSE: GME) could happen if short interest becomes too high. GameStop’s short interest reached $7 billion in 2021, so a single tweet from “RoaringKitty” was enough to send the stock to its all-time high. While these stocks aren’t as heavily shorted as GameStop once was, short interest is still high enough to potentially send them higher soon. Recently, the high short interest in SoFi Technologies Inc. .
Equity traders continue to exercise caution, with the S&P 500 near an all-time high. The index traded within a tight range near break-even for the 16th day as markets waited for the next FOMC statement, due next week. The market still hopes that rates will be cut soon, but the FOMC may not comply. The data shows inflation is cooling very slowly, leaving the FOMC in a tight spot; high interest rates impact economic activity. However, letting off the pressure too soon could accelerate inflation and put rate hikes back on the table.
The bottom line is earnings. The S&P 500 is expected to grow earnings this year and next, enough to keep the market advancing regardless of interest rates. The risk is that high rates will cause a substantial economic slowdown and cut deeply into the S&P 500's earnings power, leading the analysts to cut targets and the market into correction.
Whenever stocks reach a higher than usual short interest, investors could benefit from keeping a close eye on the future prospects for those stocks. Typically, there is a good reason for short sellers to take on a bearish view of businesses. However, like bullish sentiment, bearish sentiment can get out of hand. A saga like GameStop Corp. (NYSE: GME) could happen if short interest becomes too high. GameStop’s short interest reached $7 billion in 2021, so a single tweet from “RoaringKitty” was enough to send the stock to its all-time high. While these stocks aren’t as heavily shorted as GameStop once was, short interest is still high enough to potentially send them higher soon. Recently, the high short interest in SoFi Technologies Inc.
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Mexico's treasury secretary pledged Tuesday to bring down the federal budget deficits in coming years, after the country suffered a partial meltdown in the currency and stock markets.Finance Minister Rogelio RamΓrez said the federal deficit will be cut from this year's level of almost 6% of gross domestic product, to around 3% in coming years.The statement was an effort to calm markets after the Mexican peso dropped more than 4% on Monday against the U.S. dollar, and the Mexican stock exchange slid 6%. The peso dropped almost another 1% on Tuesday to close around 17.86 to $1. The stock market appeared to be recovering about half of Monday's losses in early trading on Tuesday.But analysts said it would be difficult to achieve such a quick reduction.
The Q1 earnings reporting season is all but finished, with more than 98% of the reports issued. While the season unfolded largely as expected, the individual reports brought some unexpected strengths. These strengths are reflected in the analysts' activity. This is a look at the three Most Upgraded Stocks tracked by Marketbeat, where the analysts see them heading over the next few quarters, and why. NVIDIA Regains Leadership Position NVIDIA (NASDAQ: NVDA), a Most Upgraded Stock since early 2023, moved up several positions this quarter to regain the top spot. The company produced another record-setting quarter, outperforming estimates and raising guidance.
U.S. job openings fell in April to the lowest level since 2021. But they remained at historically strong levels despite high interest rates and signs the economy is slowing.The Labor Department reported Tuesday that employers posted 8.1 million vacancies in April, down from a revised 8.4 million in March. The March figures had originally come in at 8.5 million.Still, layoffs fell, and the number of Americans quitting their jobs — a sign of confidence in their prospects — rose in April. Monthly job openings have come down steadily a peak of 12.2 million in March 2022 — as the economy's recovery from COVID-19 lockdowns left companies desperate for workers — but they remain at a high level.
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