How to find stocks to sell short? Today we show how you can use the popularity of stocks to find short candidates and what trade setup you need?
First of all, we need data to measure the popularity of stocks. This is easy with the published data from Robinhood. This brokerage account is pretty new and is hip by users of generation Z. Most of them are trading newbies. And this year the total number of stock positions spikes dramatically:
Robintrack keeps track of how many Robinhood users hold a particular stock over time. The number 1 of the leaderboard is Ford Motor. In the next chart you see a nice downtrend and an increasing users holding:
That’s what we are looking for. So many newbies are holding this stock because they think this is a cheap investment (stock picking). This stocks are great candidates for a short selling.
So we wait of some nice short swing setup. See the yellow arrows in the hourly chart:
An awesome example was Hertz. The company went to bankruptcy but the robinhood users bought more and more stocks:
The primary foundation of Robin Hood’s legend is that he stole from the rich and gave it to the poor. But nowadays the poor voluntarily give their money to the rich!