Stock Market Stuff to Know for September
Seasonality, short squeezes, and Swifties, oh my!
We’re so back. A LOT to get into, so let’s not waste time.
We’re going to try to go as long as we can without mentioning Nvidia (NVDA), because we’re cool and edgy and the mainstream media has covered them enough.
The Big Short (s)
In an ode to continuity, here’s Rocky’s latest short squeeze screen, the first of which made it on our Substack debut. Except now that he’s not on vacation, we were able to take the raw data and make it purrtier. Below is the table sorted by highest short interest/float.
EchoStar (ECHO) is interesting due to recency bias, fresh off a 70% melt-up Tuesday but there’s still some pessimism to be wrung out, with 11.2% of the stock’s total available float sold short.
As we said two weeks ago, its a who’s-who of high-risk, high reward growth stocks. But at least among stocks with double-digit SI/float, what’s conspicuously absent? AI-adjacent names.
A large chunk of this table isn’t directly exposed to an AI bubble. Reddit (RDDT) and Urban Outfitters (URBN) certainly. Rare earth stocks like MP Materials (MP), Ramaco Resources (METC) have their fair share of haters. TransMedics (TMDX), Liquidia (LQDA) represent the medical device sector. Small-module nuclear reactors like Oklo (OKLO) and NuScale (SMR) pair nicely with AI, but (safe, clean) nuclear energy applications go far beyond powering ChatGPT.
Sure, AI and Big Tech have such a stranglehold on the stock market that if they capitulate, it could all come crashing down. But decoupling your risk profile as best you can from the house of cards that (could) be AI — while still hunting short squeezes — seems like a smart enough hedge. If you’re of the ‘nothing ever happens’ crowd, then that list is for you.
tldr: heavily-shorted stocks that don’t have a ton of AI exposure offer the best of both worlds.
ASTS and a $50 Burger
Space, the final frontier, even for greedy investors. A Short Squeeze Screen regular and one of the more fascinating stocks to me is AST SpaceMobile (AST), of the earth exploration (EO) sector. What is EO, you ask? Think: direct SpaceX competitor in that they’re trying to get as many satellites into outer space as possible, all in the name of global connectivity. ASTS caught my eye 12 months ago as a strictly “what if Elon Musk is in over his head, isn’t some messianic genius, and has a very public falling out with DT?” play. Well, that worked out quite well. We first covered the stock in May 2024 (after it nabbed an AT&T deal), trading at $4.65.
Now, $50 seems to be a psychologically-significant pivot point. It’s been cleared, breached, tested, and retested, all since mid June. This past week alone, its done all of that, and closed on Friday at $48.94! I was ready to assign a lot more of a bullish case if $50 was cleared by week’s end, and now it might be smarter to assign more consolidation. Round-number, psychological levels like $50, like the SEC, just mean more.
Note also in the chart the trendline connecting prior highs, and the floor emerging around $42. It may take a lot of poking and prodding, but ASTS remains a great gauge for risk appetite out there, the growthiest of growth stocks.
tldr: keep an eye on ASTS’ $50 level
New Month, New Trading Ideas
Another Rocky Staple, an email our digital content team looks forward to at the end of every month. Below is Rocky’s table of the Best and Worst 25 stocks on the S&P 500, historically, in the last 10 years.
Our Chart of the Week covers VST more in depth. Seeing Advanced Micro Devices (AMD) and Goldman Sachs (GS) on the Worst table is interesting, as well as the plethora of historically-underperforming medical device or pharma names. If I could freeze time I’d spend a day and figure out why the heck those names tend to struggle in September.
tldr: Utility stock VST is a September outperformer
Swift In Gauged (SIG)
The Taylor Swift-Travis Kelce news that broke the internet on Tuesday was legitimately cool. No sarcasm. Taylor as a songwriter is a little overrated (*ducks), but damn was Eras tour in New Orleans fun, and she’s an awesome role model/inspiration. And you actually have to hand it to Travis, the puppy dog schtick goes down a lot smoother when you propose to the most popular woman on the planet.
But good GRIEF was the engagement farming insufferable after. Brands, personalities, everyone from every corner of the internet piggybacked off their announcement. Some were funny and clever, some were vomit-inducing and cringey. None will be shared here because we have values. But we’re also not totally innocent here:
Options traders can't seem to fight the alchemy, with 1,899 calls and 3,848 puts traded so far today (8/27), which is seven times the volume typically seen at this point. Most active by far is the September 95 put.
If you can find all the TS references in the above blog, please email us at dcg@schaeffers.com for your prize. (For the record, we would not have shamelessly plugged Taylor/Travis on our site SIG didn’t pop off like that.)
That September 95 put by the way, is the top SIG option on Trade-Alert. The stock hasn’t traded at that level since a post-earnings bear gap on Dec. 5.
tldr: SIG was popular thanks to the Tay-Trav bump, but options traders aren’t buying it
An Idea, With an Asterisk
Now that Nvidia earnings (600+ words in! A new FinTwit record!) are baked into the market, the tail-end of earnings season is truly upon us. But there’s at least one more report on our radar next week. Cybersecurity firm Zscaler (ZS) will be trying to avoid a Fortinet-like collapse on the charts after the market closes on Sept 2. Nothing like coming back from Labor Day to report earnings, amirite?!
The shares are 13% off their July 8 record high of $318.45, but support is stepping up at their +50% year-to-date level.
There’s potential options-related support with peak put open interest (OI) at the 270 strike, when adding up all OI on expiry’s through September, per Todd Salamone. And in the first three days of this week, there was a heavy put bias as bears take a flier next week.
Per White, ZS is also testing its 100-day moving average, a trendline that has yielded a five-day stock return of 6.4% after the last five tests. But there are some asterisks. To qualify for this list, the stock must spend 20 consecutive days above the moving average AND the close when signal is triggered must be within 0.75 x its average true range at the time. ZS has done neither.
Plus, Todd and Rocky backtested those last five signals; only two were potentially pre-earnings, and that was back in 2021. ZS has also obviously passed that five-day window of testing its 100-day on 8/22. So in this case, its probably best to view that moving average as more support and less a ‘historically bullish trendline.’
Zscaler remains one to watch, but let this serve as a reminder that you should put every signal you see out there under the hood.
tldr: ZS has chart support stepping up, but be wary next week