It’s only mid-Monday, but between general volatility and wild individual movers, there’s already a whole lot to look forward to for this week.

My favorite part yet, though? The small-cap world!

I can’t tell you how excited I was to see gap ups in high momentum names this morning – It’s been a while since we had a true multi-day runner with explosive price potential. 

And it’s not just one either – right now, I’m seeing a few names potentially setting up for fireworks, just like the good old days. 

Well, let me show you how exactly they work and what my plan for trading these is. 

Why Some Squeezes End Up Parabolic?

Squeezes happen because short traders are forced to cover their positions to avoid bigger losses.

Most of them happen intraday, are driven by short-term traders, and exhaust fairly quickly.

But at times, we get what I like to call “position traders” – people who are confident the stock is overpriced or underpriced and are willing to “hold through”, ignoring the price action.

Whenever too many position traders get involved on either side of the aisle – meaning stubbornly buying or selling despite warning signs – any price move against them may cause a major supply glut.

Obviously, such things don’t happen overnight – they may take days and weeks of build-up: short trades selling every pop, but a stock refusing to go lower and keeping them on edge.

But whenever the tipping point does come, the end results may look something like this:

And while GameStop (GME) is obviously an absolutely extreme example, it’s not rare to see sharp and violent up moves emerge out of highly shorted consolidations. 

Here are 3 names that have every telling sign: great strength, good short interest and beautiful multiday charts. 

Flora Growth Corp – FLGC

• Market Cap: 531.6M
• Free share float: 30.7M
• Short Interest: 4.3%
• ATR: 2.07

Flora Growth Corp is one of those stocks that gets famous overnight. 

Up until late July, nobody’s heard of this fairly recent cannabis IPO and the stock was trading into nowhere. 

It’s all changed when the company announced a series of marketing and distribution agreements to enter medical cannabis and over-the-counter CBD markets in Latin America and Australia. 

In a matter of 2 weeks, the name went from $3 to nearly $13 on huge volume, exploded higher on Friday, and still pulled off a huge gap up in the pre-market today. 

There’s no denying that anybody who shorted the stock is really screwed, thus, if any of this strength catches on – I wouldn’t be surprised to see parabolic squeeze out. 

I’ll be watching the stock today and over the next few days – I want to see it hold above $15 for a potential explosion into $30. 

Fulcrum Therapeutics – FULC

• Market Cap: 734.22M
• Free share float: 30.07M
• Short Interest: 2.31%
• ATR: 2.29

FULC is not only a great chart but a great biotech storyline as well. 

On August 10th, Fulcrum posted some great Phase 1 data of FTX-6058 – the company’s lead drug candidate for the treatment of Sickle Cell Disease. 

How do I know the data was that good? The big guys are willing to get behind it: $100M share offering got announced that same day and priced at $19 – nearly 2.5x higher than the closing price on the day before the data readout, and just 10% lower than the “pump’s” day’s highs. 

It’s always great to know the funds are willing to grab the shares at such generous levels – unsurprisingly, the stock has traded higher since. 

It is currently consolidating in the $20-$25 range and should it spend enough time here, I wouldn’t be surprised to see more upside. 

I want to see a steady hold above $20, for an eventual move into $30+ territory. 

Last, but surely not least…

NanoVibronix – NAOV

• Market Cap: 69.70M
• Free share float: 21.18M
• Short Interest: 25.83%
• ATR: 0.48

This is a name I’ve spoken plenty about in the past – NAOV has made a lot of heads turn when it ran from 70c to nearly $4 in one day, on an Australian marketing authorization. 

We sure did get a good pullback, but the stock hasn’t looked back since its breakout above $2.25. 

The short interest is very impressive, the volume is large, and the chart is setting up perfectly – if the stock holds up here, it can really set up for an impressive extension. 

I want to see more upside and support above $4 for a quick parabolic move into $6-8 within the next few days.