Is there a positive correlation between float and short squeeze likelihoods?

[joeltrades]

Hello,
I was just wondering if people have any data that shows that low floaters are likely to get short squeezed more both by amount and frequency.

Is this true or am I imagining it? In particular I was wondering if adding a rule to my trading that prohibits shorting any stock with < 5 million total float makes sense. Does it?

I know all about short float and interest and ratio so please no need to harp too much about that (a bit of harping is ok). Unfortunately short interest is usually outdated and not easy to obtain. They are reported less often as far as I can see. If I'm wrong please correct me.

 

[lwlee]

You may also consider the current volume and whether shares are hard to borrow. Prime example in the last 2 days. VRPX and PMCB. Both have a float between 2-3 million (check multiple sources. finviz had PMCB at 2.31 BILLION). One big difference is PMCB is easily borrowed whereas VRPX was offered to me at 0.50/shr.

In both cases, current daily volume hit over 200 million shares. If the shares turnover is X multiple of the float, then there is a good chance for a squeeze. VRPX went from $2-3 to $35 on huge volume and inability for general population to short. PMCB went from $2.50 to $9 but had heavier resistance to the move higher due to much easier ability to short.

A simple check that I like to look for daily runners is filter finviz by daily volume > 10mil and float < 10 mil. If there is that much churn, I wouldn't want to short.

Of course, these momentum small cap squeeze generally will fade on 2nd, 3rd day so that's another play to consider.