Over the next five trading days, there are hundreds of stocks that will make swings of 10% or more. The tough thing is that it's hard to predict which stocks will actually be making those moves.
However, I believe I've found a way to identify stocks that are on the verge of huge moves. By looking for companies that are heavily shorted -- or have many betting against their short-term success -- and are reporting earnings, we can predict big moves before they happen. If you don't believe me, just take a look at the three stocks I identified last week, which moved an average of 13% following their quarterly reports.
I'm not suggesting, however, that you try to turn a quick profit on this strategy, as it's impossible to know whether these stocks will be going up or down. Instead, I think it's important for investors in Five Below (NASDAQ:FIVE), Winnebago (NYSE:WGO), and GameStop (NYSE:GME) to know why their stocks might be making big moves and to focus on the numbers that really matter to long-term, buy-to-hold investors.
Brian Stoffel has no position in any stocks mentioned. The Motley Fool recommends Five Below. The Motley Fool owns shares of GameStop. The Motley Fool is short Five Below. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.