The Art of the Squeeze Play

The Art of the Squeeze
Play
Presented by:
Philip B. Erlanger, CMT
Phil Erlanger Research Co., Inc
October 23, 2004
© 2004 Phil Erlanger Research Co., Inc.
Factor Interpretations
© 2004 Phil Erlanger Research Co., Inc.
Patterns To Recognize in a 38 Factor Model:
5^38
364,000,000,000,000,000,000,000,000.
© 2004 Phil Erlanger Research Co., Inc.
5^1 = 5
5^2 = 25
5^3 = 125
5^4 = 625
5^5 = 3,125
5^10 = 10,000,000
Erlanger Model: 2 Factors
Observing
2 Factors
Price Action
Sentiment
© 2004 Phil Erlanger
Research Co., Inc.
Sentiment
Question:
Who Is The Majority At Risk?
© 2004 Phil Erlanger
Research Co., Inc.
Price Action
Question:
How Is The Market Treating The Majority?
© 2004 Phil Erlanger
Research Co., Inc.
SQUEEZE PLAY
Short Squeeze:
Majority is Short but….
Price is Advancing
© 2004 Phil Erlanger
Research Co., Inc.
SQUEEZE PLAY
Long Squeeze:
Majority is Long but….
Price is Declining
© 2004 Phil Erlanger
Research Co., Inc.
Sentiment
Short Interest Data:
 Data
on most stocks
 Released Monthly with delay of 10-days
 Reflects Intermediate time frame
Equity Options Activity:
 Stock
Specific
 Universe = Optionable Stocks
 Reflects Short-Term time frame
 Reflects Raw (speculative) sentiment
Sentiment - Short Interest Data
 Reported
monthly by the exchanges
 Short Ratio = Current Shorts / Average
Daily Volume
 Erlanger Short Ratio = Current Shorts /
12-month Avg. of
Average Daily
Volume
© 2004 Phil Erlanger
Research Co., Inc.
© 2004 Phil Erlanger
Research Co., Inc.
Price Action
 Trend Indicators:
 DMA – Displaced Moving Averages
 Relative Strength – Tech Rank
 Volume Indicators – OBV, ETD, Money Flow
 Group
& Sector Action
 Seasonality
Short Interest Data - Dow
DOW JONES 30 INDUSTRIALS
10000
© 2002 Phil Erlanger
Research Co., Inc.
7500
5000
2500
10.0
ERLANGER SHORT RATIO
7.5
5.0
2.5
1995
$9878.78 as of Friday, March 30, 2001
Short Interest Data - Dow
DOW JONES 30 INDUSTRIALS
10000
© 2004 Phil Erlanger
Research Co., Inc.
7500
5000
2500
10.0
ERLANGER SHORT RATIO
7.5
5.0
2.5
1995
$9878.78 as of Friday, March 30, 2001
© 2004 Phil Erlanger
Research Co., Inc.
Short Interest Data - Dow
© 2004 Phil Erlanger
Research Co., Inc.
Short Interest Data - OTC
Short Interest Data – S&P 500
© 2004 Phil Erlanger
Research Co., Inc.
DMA Channel – MU
DMA Channel – MU
DMA Channel – MU
Short Interest Data – MU
© 2004 Phil Erlanger
Research Co., Inc.
Erlanger Type Classifications
© 2004 Phil Erlanger
Research Co., Inc.
CLOSE
ERLANGER TYPE CLASSIFICATION
12/10/96
10/21/96
8/30/96
7/12/96
5/22/96
4/2/96
2/12/96
12/21/95
11/1/95
9/13/95
7/25/95
6/5/95
4/13/95
2/23/95
1/4/95
11/11/94
9/23/94
8/4/94
6/15/94
4/25/94
40
3/4/94
60
1/13/94
11/23/93
Erlanger Type Classifications
1
140
2
120
3
100
4
80
5
© 2004 Phil Erlanger
Research Co., Inc.
6
7
Micron Technology
8
20
9
0
10
Erlanger Squeeze Screens
Erlanger Squeeze Screens
Erlanger Squeeze Screens
Type 1 Short Squeezes – 10/22/04
Erlanger Squeeze Screens
Type 4 Short Squeezes – 10/22/04
Short Squeeze
Short Squeeze
Short Squeeze
Short Squeeze
Long Squeeze
Long Squeeze
Long Squeeze
Long Squeeze
Long Squeeze
Long Squeeze
Long Squeeze
Long Squeeze
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2000 Phil Erlanger
Research Co., Inc.
Groups and Sectors
© 2004 Phil Erlanger
Research Co., Inc.
DMA Oscillator Color Study