phil erlanger research
THE ART OF THE SQUEEZE PLAY

Phil Erlanger Research presents
Erlanger Chartroom tm  - Bloomberg Edition
 

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Each week PER publishes two screens from a universe of mainly large cap issues.

The Type 1 Short Squeeze screen selects those issues that have strong patterns and qualify as having sufficient short intensity and technical strength to be classified as short squeezes.

The Type 4 Long Squeeze screen selects those issues that have weak patterns and qualify as having insufficient short intensity and technical strength to be classified as long squeezes.

We track the data of both screens, as well as the spread (hedge) between the two against the S&P 500 Index (For purposes of comparison, we calculate the hedge as the difference of the Short Squeeze screen weekly performance and the Long Squeeze screen weekly performance. In order to achieve the return of this comparison, leverage on each side of a hedged portfolio must be used):

 

 The Type 1 Short Squeeze screens are considered attractive candidates for the long side of hedge fund strategies. The Type 4 Long Squeeze screens are considered attractive candidates for the short side of hedge fund strategies. The desired effect of a successful hedge strategy is to perform well in weak markets, and level with or better than the market during strong markets. The chart below shows the screens as a hedge relative to the S&P 500:

 

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