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The Art of the


Squeeze Play
Presented by:

Philip B. Erlanger, CMT


Phil Erlanger Research Co., Inc
April 23, 2009
© 2009 Phil Erlanger Research Co., Inc.
Contrary Opinion
Factor Interpretations

© 2009 Phil Erlanger Research Co., Inc.


Patterns To Recognize in a 38 Factor Model:

5^38

364,000,000,000,000,000,000,000,000.
© 2009 Phil Erlanger Research Co., Inc.

5^10 = 10,000,000
Erlanger Model: 2 Factors

Observing
2 Factors

Price Action Sentiment


© 2009 Phil Erlanger
Research Co., Inc. Sentiment

Question:

Who Is The Majority At Risk?


© 2009 Phil Erlanger
Research Co., Inc. Price Action

Question:

How Is The Market Treating The Majority?


© 2009 Phil Erlanger
Research Co., Inc. SQUEEZE PLAY

Short Squeeze:

Majority is Short but….

Price is Advancing
© 2009 Phil Erlanger
Research Co., Inc. SQUEEZE PLAY

Long Squeeze:

Majority is Long but….

Price is Declining
© 2009 Phil Erlanger
Research Co., Inc. Price Action

Focus on:

TREND INDICATORS

SEASONALITY
© 2009 Phil Erlanger
Research Co., Inc. Trend Indicators

Focus on:

ERLANGER TREND DIRECTION

RELATIVE STRENGTH
Trend Direction – S&P 500
Relative Strength – Amgen
Relative Strength – Amgen
Relative Strength – Amgen
Relative Strength – Amgen
© 2009 Phil Erlanger
Research Co., Inc. Seasonality

¾ Only indicator you can see ahead of time!


¾ Data on stocks, ETFs, groups, sectors and
indices (even the VIX.)
¾ Can be tested for validity and consistency
¾ Doesn’t cause moves, reflects tendencies
Seasonality
Seasonality
Seasonality
Seasonality
© 2009 Phil Erlanger
Research Co., Inc. Seasonality
© 2009 Phil Erlanger
Research Co., Inc. Seasonality
© 2009 Phil Erlanger
Research Co., Inc. Seasonality

Identify Major Turning Points


© 2009 Phil Erlanger
Research Co., Inc. Seasonality

Identify Positive and Negative Seasonal Zones


© 2009 Phil Erlanger
Research Co., Inc. Seasonality

Positive Seasonal Zones in Blue


© 2009 Phil Erlanger
Research Co., Inc. Seasonality

Negative Seasonal Zones in Orange


© 2009 Phil Erlanger
Research Co., Inc. Seasonality
© 2009 Phil Erlanger
Research Co., Inc. Seasonality

Positive Seasonal Heat


© 2009 Phil Erlanger
Research Co., Inc. Seasonality

Negative Seasonal Heat


Sentiment

Short Interest Data:


¾ Data on most stocks
¾ Released Bi-Monthly with delay of 10-days
¾ Reflects Intermediate time frame

Equity Options Activity:


¾ Stock Specific
¾ Universe = Optionable Stocks
¾ Reflects Short-Term time frame
© 2009 Phil Erlanger ¾ Reflects Raw (speculative) sentiment
Research Co., Inc.
Sentiment - Short Interest Data

¾ Short Ratio = Current Shorts / Average


Daily Volume

¾ Erlanger Short Ratio = Current Shorts /


12-month Avg. of
© 2009 Phil Erlanger
Average Daily
Research Co., Inc.
Volume
Short Interest Data – S&P 500

© 2002 Phil Erlanger


Research Co., Inc.
Short Interest Data – S&P 500

© 2002 Phil Erlanger


Research Co., Inc.
Short Interest Data – S&P 500
Short Interest Data – S&P 500
Short Interest Data – S&P 500
Short Interest Data – S&P 500
© 2009 Phil Erlanger
Research Co., Inc.
Short Interest Data – MU
Amgen
WorldCom
Erlanger Type Classifications
© 2009 Phil Erlanger
Research Co., Inc.
Erlanger Type Classifications

© 2009 Phil Erlanger


Research Co., Inc.
Erlanger Squeeze Screens
Groups and Sectors

© 2009 Phil Erlanger


Research Co., Inc.
Groups and Sectors

© 2009 Phil Erlanger


Research Co., Inc.
Groups and Sectors

© 2009 Phil Erlanger


Research Co., Inc.
Groups and Sectors

© 2009 Phil Erlanger


Research Co., Inc.
Groups and Sectors
Groups and Sectors
Options
Options
Weekly Seasonal Short Interest
Technical Reports - SSIT

Erlanger Seasonally Strong Ideas Report :

¾ Positive 10, 20 and 40 days forward, seasonally


¾ Positive Seasonal Cycle R
¾ Positive Seasonal Average Heat
¾ Elevated Short Selling underway
¾ Trend Direction not in downtrend
¾ DMA Channel Status (Monthly, Weekly & Daily)
¾ Option Rank, Power Rank, RSI
¾ Sector Breakout
Weekly Seasonal Short Interest
Technical Reports - SSIT
Erlanger Seasonally Weak Ideas Report :

¾ Negative 10, 20 and 40 days forward, seasonally


¾ Positive Seasonal Cycle R
¾ Negative Seasonal Average Heat
¾ Diminished Short Selling underway
¾ Trend Direction not in uptrend
¾ DMA Channel Status (Monthly, Weekly & Daily)
¾ Option Rank, Power Rank, RSI
¾ Sector Breakout
Market Commentary

We’re In A Tight Spot


Market Commentary

Mega Declines: The Good


Market Commentary

Mega Declines: The Good

-41.16%
Market Commentary
Mega Declines:
The Bad

-46.59%
Market Commentary

Mega Declines: The Ugly

-49.39%

-84.49%
Market Commentary

© 2009 Phil Erlanger


Research Co., Inc.
Market Commentary
121.74%

60.87%

-54.90%
Market Commentary
Market Commentary
Market Commentary
Market Commentary
Market Commentary
Market Commentary
Market Commentary
Market Commentary
Market Commentary
Market Commentary
How to Find Us on Bloomberg:

ERLN <go>

www.ErlangerResearch.com
www.GoodMorningWallSt.com
Phil Erlanger Research Co., Inc.
P.O. Box 2680
Acton, MA 01720
phil@erlanger.com
Tel.: 978-263-2536
Fax: 978-266-1104