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Short interest data shows a lot of investors betting against these shares, but with the technical indicators pointing higher, the short crowd may soon get flattened.

The monthly short interest data has long been watched by some analysts as it provides data on stocks that have the largest short positions. It can often alert you to some interesting opportunities, but keep in mind that short sellers aren’t always right, and that many rely on fundamental and not technical analysis.

Of course if a trader is short a stock and the price rises up, then the trader is losing money and will have a higher margin requirement. In analyzing short interest data one can often look at the short interest ratio. It is calculated by dividing the number of shares sold short by the average daily volume and tells one the number of “average volume” days it would take to cover the short position.

These three stocks have a relatively high short interest and more important have weekly technical patterns that suggest they will move higher, not lower.

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Chart Analysis: Buckle Inc. (BKE) is a $2.3 billion retail seller of men and women’s casual apparel and shoes throughout the US. BKE had a slight monthly increase in the number of shares short and has a short ratio of 23. The weekly chart shows the completion of a ten-month flag formation, lines a and b.

• The 127.2% Fibonacci retracement target is at $52 with the monthly Starc+ band at $54.40
• The measured targets from the flag formation are in the $58-$60 area
• The weekly relative performance, or RS analysis, has turned up sharply and shows a pattern of higher lows, line c
• Weekly volume was heavy last week and the on-balance volume (OBV) has moved above resistance at line d
• Initial weekly support is at $42.90, which was last week’s low

The daily chart shows the higher gap opening last Thursday and the convincing break above the resistance at line e. There is gap support now at $45.64-$46.76 with the mid-February highs at $45.97.

• The daily RS line has jumped sharply and has moved above three-month resistance
• The daily chart shows that the volume was strong on the gap higher last week
• The daily OBV has broken its downtrend, line g, but is still below the November highs

NEXT: 2 More Dangerous Short Plays to Avoid