A massive short squeeze in Shake Shack is sending shares soaring
Matt Maley
Shares of the burger chain have soared more than 35 percent in the last three months. Despite the rally  it's still one of the most heavily shorted stocks in the market. According to FactSet data  Shake Shack short interest comes in at 48 percent of its float  and that leaves Miller Tabak technician  Matt Maley  warning against its sizzling hot run.
"The stock did break above double top levels to 2017 highs of $40 "  Maley  said Wednesday on CNBC's "Trading Nation." "A lot of that fuel has been short covering  I think it's going to pull back from here."
In other words  Shake Shack's rally is unsustainable  according to the technical analyst. Additionally   Maley  points out that the stock is extremely overbought at current levels. When investors short stocks  they are betting that shares will fall. But when shares rise  those investors are often forced to cover their short bets  and that can send a stock soaring.
However   Maley  also emphasizes that the stock's break above $40  which happened late November  is overall positive on an intermediate-term basis. "If you do want to  buy it  but I would buy it on weakness rather than chase it up at these levels " he cautioned.
Shares of the burger chain have soared more than 35 percent in the last three months. Despite the rally  it's still one of the most heavily shorted stocks in the market. According to FactSet data  Shake Shack short interest comes in at 48 percent of its float  and that leaves Miller Tabak technician  [TGT]warning against [TGT] sizzling hot run.
"The stock did break above double top levels to 2017 highs of $40 [TGT]said Wednesday on CNBC's "Trading Nation." "A lot of that fuel has been short covering  I think it's going to pull back from here."
In other words  Shake Shack's rally is unsustainable  according to the technical analyst. Additionally   [TGT]points out that the stock is extremely overbought at current levels. When investors short stocks  they are betting that shares will fall. But when shares rise  those investors are often forced to cover their short bets  and that can send a stock soaring.
However   [TGT]also emphasizes that the stock's break above $40  which happened late November  is overall positive on an intermediate-term basis. "If you do want to  buy it  but I would buy it on weakness rather than chase it up at these levels " he cautioned.