Sometimes the happenings in the stock market simply leave you breathless. All logic goes out the window and a deeper force takes over the psyche of traders. This is certainly the case with Travelzoo (TZOO) over the past few weeks. I have been rendered speechless watching the daily action in this stock, but there are valuable lessons embedded in the parabolic chart.
Short Squeeze For the Ages
The shorts in this stock are living in a constant nightmare that just won’t end. Everything in their being is telling them that the move higher is irrational and that a big downturn is coming. Yet day after day, the stock soars regardless of what the market is doing. The stock has more than doubled in a little over a month.
Ostensibly, the reason for the upsurge is optimism that the company will make a lot of money in the local deals market, particularly the travel market. Groupon’s rise to prominence has investors thinking that Travelzoo can also ring up monster sales doing that as well.
The Chart
One look at the chart speaks volumes. It has taken a life of its own over the past month. Short squeezes like this usually go on longer than even the most bullish of bulls think possible. All who try and pick the top by shorting get bulldozed, thus adding more fuel the upside fire. We likely haven’t seen the top in this stock.
That being said, I would advise against buying the stock here because when the top occurs, the downside occurs with breath-taking quickness. The billion dollar question is from what level will this occur? $100? $150? It’s best to observe from the sidelines and look for safer pastures to park your money. Either buying or shorting this stock right now is akin to pure gambling and I personally have more fun at the poker tables for that. The bottom line is this stock should be avoided by all right now.
Travelzoo: Both Sides Should Stay Away is an article from: 
