TL;DR: Just click on this link and always find the stocks that most of the people are shorting and are in a downtrend. If you want to understand and tweak/add your own criteria, then read on.
This guide is also a quick tutorial on using the Finviz screener using the example of finding companies that most of the people are shorting. All you need to know is what the filters mean and then you can start cooking and creating your own recipes. Will that be a recipe for success or disaster? That you need to find out by doing your own DD on the shortlisted stocks. The purpose is to find “potential” stocks. It doesn’t mean that they are guaranteed to go down or bankrupt. Are you ready? Let’s get started.
- Navigating to the screener
Click on this link: finviz.com/screener.ashx
Well, that was easy!
Under filters, you will see 4 tabs: Descriptive, Fundamentals, Technical, and All. Click on “All” and view all the filters. Alternatively, if you are feeling lazier than usual then you can directly click on this link and already have the “All” tab selected for you: finviz.com/screener.ashx?v=111&ft=4
Are you getting dizzy already with all the options you see on this page? Don’t worry, we will look at the interesting ones and add these one-by-one.
- Basic Filters
We will start by adding below filters:
- Market Cap.: “+Micro (over $50mln)”
- Why settle for small fish when you can try to catch a big fish
- Current Volume: “Over 200K”
- If other traders aren’t trading it, you don’t want it either
- Option/Short: “Optionable”
- So that if you want to buy PUTs and don’t want to get disappointed later
These are simple and straightforward filters. Nothing special here.
TIP: Hover your mouse over any of the filter and Finviz gives you small tip about what the filter is all about.
- Key Filters to find companies potentially going ka-fuckin-boom
Now the companies going down have at bare minimum two things happening to them. One their price is being reduced to penny stocks. Second, more and more people will start shorting their shares. I know there are a lot more factors. But we are trying to keep things as simple as possible.
For the first one, you simply want to put a filter on “Price”. Set the price to low value i.e. less than 20 or in all probability even less than 10. Closer to zero and more chances it has to go boom.
For the second one, we need to understand a few concepts first. These will be the most simple yet some things you will start using a lot after reading this post. Let’s get these out of the way.
- Shares Outstanding: This is the total number of shares of the company. Most of these are available to the public but not all.
- Float: How many shares are available to trade in the market i.e. you and I can buy from this lot. This is a subset of Shares Outstanding.
- FLOAT SHORT: Percentage of total shares that are being shorted.
Now read the last one again. Then print it and stick it to the wall above your bed. This is simple yet one of the most powerful concepts. In other words, it tells you out of the total people holding the shares of the company how many are showing the middle finger to the company and putting money where their mouth is.
In a “sane” world, any sane person will only buy PUTs and/or short the share of a company that just filed for Bankruptcy or filed for Chapter 11. More on this sooner.
Ok, back to Finviz. Set the below filters (in addition to the ones we set before):
- Price: “Under $20”
- Float Short: “Over 30%”
Select that and BOOM. You will start seeing all the recent superstars in this category including HTZ, LK, GNC, WLL, etc.
Inverse relationship: Having a high float short doesn’t always mean that share will go down. In fact, this can cause an explosive move up. This is counterintuitive at first but will make more sense in a minute.
Consider that a stock has a high short interest (i.e. high percentage for float short). If there comes some good news for the stock like good earning report then share starts moving up. Now all those people who shorted the share start shitting their pants. To cover the shorts, they need to buy back the shares. More buying bumps the price even further up and hence causing the explosive move up. Is there any technical term that you can flaunt around for this phenomenon? Of course, there is. It is called “Short Squeeze”. Literally squeezing the fuckers who were wrong about the stock direction and shorted it. This is one of the strategies that is traditionally used a lot during earning season for any upsets. But that is a topic for a different post.
I believe this was one of the reason companies that declared bankruptcy saw explosive moves. Hedge fund managers shorted the fuck out of these companies. Then RH and other retail traders stepped in and moved the price up. The managers had to buy back to cover their shorts and could have made the price go to the moon. Seeing this caused FOMO in new retail traders and drove the price even further to mars. I could be way off, but I think this was ONE of the reasons for all that explosive craziness.
An alternate way of using Float Short: If you are bullish on a stock, you want others to be so too. Float Short can help confirm your bias. In other words, look up that stock and check for its float short (on Finviz or Yahoo finance or any other site). If it’s below 10% then you have better chances of being right on that naked Call.
- Going nerdy and adding some TA
The list is still long and I can’t investigate at all these stocks.
Alright, let’s use some TA (Technical Analysis or voodoo science) Filters and weed out some stocks. Add the following filters:
- 50-Day Simple Moving Average: “Price below SMA50”
- It indicates that the stock is potentially in a mid-term downtrend
- 200-Day Simple Moving Average: “Price below SMA200”
- It indicates that the stock is potentially in a long-term downtrend
Basically we are finding stocks which are in a potential downtrend. You want to catch these potential bankrupt companies on their downtrend. Ride it and get the fuck away.
Optionally, you can also play with Institutional Ownership. You want to work with stocks where institutions have lower ownership. So lesser the better for this number. E.g. Carl Icahn having a bigger stake in HTZ had the power of moving the stock either way based on what he dreams about the previous night. You don’t want to sit holding your dicks and praying he doesn’t dream a nightmare. Reminder: he did dream a nightmare but only after losing billions. “Under 80%” is a good start.
BONUS #1: You can save your filters as presets so you don’t need to click and select all these filters again and again. You can figure this one on your own. Hint: click on the top-left dropdown which says “My Presets”. You will need to do the free sign up on finviz, give all your info, and sell your soul. Disclaimer: I have already done so.
BONUS #2: What are those buttons (actually Tabs) right above all the stocks and right below the Filters? If you are a nerd and don’t just go by other’s DDs and want to do your own DDs, you can look at a bunch of info simply by clicking on these tabs. You can even sort by different criteria.
E.g. click on the Financials tab and the table below changes to show you the financial information. Then click on ROA to sort by that. Click twice to see which stock has the worst value for ROA. ROA is Return on Assets which tells you how the company is using its assets to generate revenue. And of course, Fuckin Luckin Coffee (LK) is the winner by far (at the time of the writing of this).
Another interesting one is Performance. Under that click on “Perf Quart” to look at who did worst (or best) in the quarter. Can you guess which one could it be (in our screen) that was the worst of the worst? Again Fuckin Luckin Coffee (LK) followed by HTZ.
To look at the details of one stock, you can simply click on it. If you did your graduation in Finance or Commerce or love finance in general, you will get nerdgasm by looking at all the numbers and the chart on the next screen. This is the only thing I can guarantee in this post.
If you have reached here, either you have very good scrolling skills or you simply want to jump onto comments or you now have a better understanding of the Finviz screener. We just covered the tip of the iceberg. These concepts and the same filters are equally applicable to other screeners out there. You don’t need to stick with Finviz at all. It is old and not at all fancy but it works and is (mostly) free.
If you think (or know) that I am wrong on any of the points above, feel free to roast me in the comments below. If you have other hidden gems in terms of screens, don’t hesitate to share.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.