I posted a handful of charts of interest below, and directly under each candle stick chart I posted a graph showing the historical borrow rate for shorting shares. I tried to align it so the two charts line up time frame wise, but they’re from two different sources so it’s not spot on (it’s close enough). So what are we looking at here? The borrow rate is the annualized rate brokers charge to borrow shares in order to short. The riskier the short (ie the more volatile) and the harder the borrow is to come by, the more expensive the borrow rate becomes. The rate changes intraday so if there’s a short squeeze on any given day, it’s highly likely that the borrow rate could spike intraday.
I have little to no authority to speak much on using this tool specifically, in fact the reason I’m posting this is to bring the borrow rate concept into the Chart Diligence lexicon. I want to highlight a number of plays of interest and speak on what stands out to me. I believe following a stock’s borrow rate can be another helpful thing to know, especially for specific types of plays. Which types exactly? And how can we best use this tool? This is precisely why I’m bringing it up for us to further pounder and explore.
The general idea, I believe, is that a significantly rising/high borrow rate/cost seems to correlate with good (squeezy) things happening to the stock, or at least potentially building up to that possibility. The same can be said, seemingly, for a falling # of shares available to borrow against – though this correlation seems much more flimsy. The blue line in the lower graph is the borrow rate, and the red bars are the shares available to borrow against. If you want to know where I’m finding the info, I’ll link each ticker below to the page with all the short data. I highly recommend saving the link and dabbling with it and see if this is another weapon you can add to your armory.
$CEOS – On 1/09/23 the pps spiked on heavy volume, then went sideways. It was a mostly subtle and unnoticed bullish sign, but it was a bullish sign. Then on 1/13/23 and into 1/16 the borrow rate spiked considerably. By 1/16 the BR was at 6% but it wasn’t until 1/20/23 that the pps really began to move. That’s a 350% move so far and counting, and this looks like a situation where the spiking BR could have gotten you in before the bulk of the price move. Very promising.
$GDVM – I’m posting this one because for the entire period shown below the borrow rate has been very high, which would make sense since this guy has been floating and getting squeezed higher and higher since before the data here goes back. I’m wondering if some of these OTCs which successfully get squeezed perpetually into new monthly highs can hold highly elevated BR for years.
$GNS – Here’s a good non-OTC example. The crazy spike didn’t occur until the same day as the pps explosion (1/19/23), however what may not be obvious is that up until that point it was already at a very high BR level. The high rate was the baseline and floor, which it held as the pps steadily fell. The high baseline/floor on the BR wouldn’t have been a good timing indicator as the pps declined steadily despite the high BR. However, if you notice right before the pps broke out it did show a tiny spark of life by getting above the 50 MA. So maybe that was a good (combo) signal to look for in the future? A high BR floor/baseline like $GNS had, but then wait for that first little subtle bullish spark of life, such as sneaking above the 50 MA and holding it? Food for thought, but this combo concept seems very promising.
$GROM – Let’s build upon that last example with the same idea/concept. If you look at the borrow rate here, it was already quite high and had a base around 20% all through October and November, and then in recent months it’s very steadily stair-stepped higher and higher. Yet, despite that, other than the one gap up candle recently, the pps has been mired in the dirt. So to build off of the last example, maybe this is a play where the very high borrowing rate baseline is hinting at the big potential here, but not tipping us off as to the timing of the next pop. With that being said, the next little blip of strength may be a good one to take a starter position on. Also, notice how the shares available to borrow have plunged while the borrowing rate has gone up? If the $GNS high BR baseline was a sign that it was very primed for a big move, then $GROM here should be even more so. Look for that next little subtle bullish sign and be ready for it to potentially pull a $GNS.
You’ll hear me discuss this a lot more in the coming days/weeks/months, but I think we’re in the midst of a long term (multi-year) phase of unprecedented short squeezes. Adding all the tools we can to our tool box now will hopefully prepare us for what’s to come later, which I believe will be more life changing opportunities in the market than ever before. I appreciate having you all in the chat and keeping our group tight-knit, and I truly hope we all can make life changing gains together, in the coming months and years.