Are you looking for a bullish tell in the stock market? CNBC’s Jim Cramer has some advice that could help you spot potential opportunities.
When a company’s management starts buying back shares of a stock with high short interest, it could be a signal that the stock won’t go any lower. This action could lead to a short squeeze, where short sellers rush to cover their positions, driving the stock price higher.
Cramer emphasizes the importance of doing your homework in these situations. While siding with management can often lead to profitable outcomes, it’s crucial to be cautious, especially if the market is volatile and shorts are heavily targeting a stock.
One strategy Cramer suggests is investing in stocks with solid dividends. Short sellers may think twice about heavily shorting these stocks, as they would need to pay back the dividends from the borrowed shares.
In addition to insider buying, a high dividend yield coupled with heavy short interest could present a compelling investment opportunity. Just be sure to steer clear of stocks where shorts are determined to crush the stock at any cost.
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