BreakoutTrader
Long

DLIA Short Squeeze - 7.5:1 Reward/Risk

NASDAQ:DLIA   None
109 0 0
Stock has been beaten down and continued to fall since the gap on 9/17. Short term pop is very likely which would create high short term volatility for both longs and shorts. The technical properties are as follows:

1.) Low float - DLIA has 66MM total shares outstanding
2.) High short - Over 13MM shares sold short as of 11/14, this represents over 21% of DLIAs total float.
3.) Volume - Average daily volume has been increasing and price action is trending upward.
4.) Days to cover - is currently 8 days at current average volume levels. On heavy volume days to cover would still be approximately 4 days.
5.) Price is holding above the 13EMA, 21MA and holding at previous resistance of .13
6.) Possible ascending triangle has formed 11/10 - 11/26

Current price target for the squeeze is a pop to .28. Given the high short interest price may potentially fill the 9/17 gap as highlighted in the chart. Given these factors both sides of the trade should use caution when entering this trade. Entering on a sold solid close above the .13 mark with a stop loss around .11 would give a reward/risk ratio of 7.5:1 or more.

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