Holiday Heatwave: Top ASX Short Squeeze Candidates to Watch

As the festive season draws to a close and we look towards a promising new year, the ASX market continues to buzz with activity. While many are winding down, savvy investors are always on the lookout for opportunities, and this week, our data points to some compelling short squeeze candidates.

At ASXShort.app, we specialise in identifying stocks where short sellers might be feeling the heat. A short squeeze occurs when a stock's price surges upwards, forcing short sellers (who bet on a price decline) to buy back shares to limit their losses. This buying frenzy further fuels the price increase, creating a powerful upward spiral. Identifying these opportunities requires a deep dive into short interest data, price action, and underlying company fundamentals.

This week, our proprietary algorithm has flagged three stocks with significant short squeeze potential as of December 18, 2025. Let's break down why DEVELOP GLOBAL LTD (DVP), PLS GROUP LTD (PLS), and PALADIN ENERGY LTD (PDN) have caught our attention.

Understanding Our Metrics

Before we dive into the specifics, let's briefly explain some key metrics you'll see:

• Blended Score (0-100): This is our proprietary composite score, designed to give you a quick snapshot of a stock's overall short squeeze potential. It's weighted as 55% "Shorts Wrong" (how much short sellers are losing), 30% "Squeeze Potential" (factors like high short interest and low liquidity), and 15% "Squeeze Starting" (early signs of a squeeze unfolding). A higher score indicates greater potential.
• Current Short %: This represents the percentage of a company's total shares on issue that are currently held in short positions. A higher percentage means more shares need to be bought back if the price rises.
• Days to Cover (DTC): This metric estimates how many days of average trading volume it would take for all current short sellers to buy back their shares. A higher DTC indicates that it would be more difficult and time-consuming for shorts to exit their positions without significantly impacting the stock price. This is a crucial indicator of squeeze potential.
• Momentum (5d/20d/60d): These percentages reflect the stock's price performance over the last 5, 20, and 60 trading days, respectively. Strong positive momentum can put pressure on short sellers.
• Lending %: This indicates the availability of shares to borrow for short selling. A lower lending percentage suggests it's becoming harder and more expensive for new short positions to be opened, potentially limiting further downward pressure.
• Price Resilience: A score (0-100) indicating how well a stock's price has held up or even increased despite persistent short selling pressure. A high score suggests underlying strength that shorts might be underestimating.
• Price vs. Weighted Avg Short Entry Price: This tells you how much the current price has moved relative to the average price at which short sellers initiated their positions. A positive percentage indicates shorts are currently losing money.

---

This Week's Top Squeeze Candidates

1. DEVELOP GLOBAL LTD (DVP) - Basic Materials

Blended Score: 75.7 | Confidence: MEDIUM

Develop Global Ltd (DVP) operates in the industrial metals and mining sector, a space often subject to commodity price fluctuations and operational risks. However, this week, DVP stands out with a very compelling short squeeze thesis, particularly in light of a significant recent announcement.

On December 18, 2025, DVP announced that it was "Develop awarded A$200m contract with OceanaGold." This is a highly price-sensitive announcement that fundamentally changes the short-term outlook for the company. Such a substantial contract win typically signals increased revenue, improved financial stability, and validated operational capabilities. This positive catalyst could easily invalidate many of the original bearish arguments short sellers held.

Our data shows DVP with a Current Short % of 5.2%, which, while not the highest on the ASX, is significant enough when combined with other factors. Crucially, its Days to Cover (DTC) stands at a robust 12.3 days. This means it would take over two weeks of average trading volume for shorts to cover their positions, making any rapid price increase extremely challenging for them to navigate without incurring substantial losses.

The Price Resilience score of 100.0 is exceptional, indicating that DVP has shown maximum strength against short-selling pressure. This resilience, now bolstered by the OceanaGold contract, suggests a strong underlying belief in the company's value. Furthermore, the stock's recent price action is very strong: Momentum_5d is 11.48% and Momentum_20d is 32.39%. This upward trend, likely amplified by the contract news, is directly working against short positions. Perhaps most telling is that the current price of $4.66 is 31.03% higher than the weighted average short entry price of $3.5563. This means short sellers are already significantly underwater, and the recent contract news provides a strong incentive for them to reconsider their positions and potentially cover, adding fuel to any rally.

2. PLS GROUP LTD (PLS) - Basic Materials

Blended Score: 74.95 | Confidence: MEDIUM

PLS Group Ltd (PLS), also operating in the industrial metals and mining sector, presents another intriguing case for a short squeeze. Unlike DVP, there isn't a specific recent price-sensitive announcement provided in our data that would act as an immediate catalyst. However, the data reveals a company that has been performing exceptionally well, potentially trapping short sellers who bet against its continued rise.

PLS has a substantial Current Short % of 9.8%, indicating a significant portion of its shares are being bet against. This high short interest sets the stage for a dramatic squeeze if the stock continues its upward trajectory. The Days to Cover (DTC) is 10.4 days, which is still a high number, suggesting that exiting these short positions would be a multi-day process, likely exacerbating price movements.

Where PLS truly shines is its incredible price momentum and position. The stock is currently trading at its 52-week high (Pct_from_52w_high: 0.0%) and has achieved an astounding Momentum_60d of 85.59%. This means the stock has nearly doubled in the last two months! This relentless upward march, especially to new highs, is a nightmare scenario for short sellers, who are now caught in a classic "momentum trap." Their initial thesis of a price decline has been thoroughly disproven by the market. The data confirms their pain: the current price of $4.38 is a staggering 119.13% higher than the weighted average short entry price of $1.9988. This implies short sellers are deep in the red, facing immense pressure to cover.

With a perfect Price Resilience score of 100.0, PLS has demonstrated an unwavering ability to climb despite the considerable short interest. The combination of high short interest, high DTC, and a stock relentlessly pushing to new highs makes PLS a prime candidate for a squeeze as short sellers are increasingly forced to capitulate.

3. PALADIN ENERGY LTD (PDN) - Energy (Uranium)

Blended Score: 70.2 | Confidence: HIGH

Paladin Energy Ltd (PDN) operates in the Uranium sector, an industry that has seen renewed interest and often significant volatility. PDN stands out this week with the highest short interest among our top candidates and a "HIGH" confidence rating for squeeze potential.

Similar to DVP, PDN also recently released a potentially game-changing announcement. On December 17, 2025, the company announced a "Debt Restructure Leverages Enhanced Liquidity." This is a critical price-sensitive development. A successful debt restructure typically reduces financial risk, improves a company's balance sheet, and frees up capital for growth or operations. This kind of news can significantly alter investor perception and remove a key concern that short sellers might have been banking on.

PDN boasts the highest Current Short % in our list at 13.4%, indicating a very aggressive bearish bet against the company. More critically, its Days to Cover (DTC) is an exceptionally high 19.2 days. This means it would take nearly a full month of average trading volume for shorts to unwind their positions. Such a high DTC signifies extreme liquidity risk for short sellers if a buying frenzy begins – they simply cannot exit quickly without pushing the price dramatically higher.

The stock is also showing strong recent performance, with Momentum_5d at 11.21% and Momentum_20d at 21.8%. Although its Price Resilience score is 70.0, which is good but not perfect, the recent positive announcement on debt restructuring could be the catalyst that pushes this score higher and triggers a significant reassessment by the market. The current price of $9.72 is 30.94% above the weighted average short entry price of $7.4231, confirming that short sellers are already sitting on substantial losses. The combination of extremely high short interest, an exceptionally high Days to Cover, strong recent momentum, and a positive, price-sensitive announcement provides a very potent setup for a short squeeze in PDN.

---

Key Takeaways and Conclusion

This week's top short squeeze candidates – DVP, PLS, and PDN – present compelling cases for different reasons, but all share critical characteristics: significant short interest, high Days to Cover, and short sellers already facing considerable losses.

• DVP is riding high on a major contract win, which could be the definitive catalyst to force short covering.
• PLS is a testament to strong momentum, with short sellers caught in a trap as the stock relentlessly pushes to new 52-week highs.
• PDN combines aggressive short positioning with an exceptionally high Days to Cover, making it highly vulnerable to its recent positive debt restructure news.

The holiday period can sometimes lead to thinner trading volumes, which can amplify price movements, making short squeezes even more potent. As we head into the new year, keeping an eye on these stocks could prove insightful.

---

Disclaimer: This blog post is for informational and educational purposes only and is not financial advice. The information provided is based on data available as of 2025-12-18 and reflects our proprietary analytical models. Investing in the stock market involves risks, and short squeeze opportunities are inherently volatile. You should conduct your own thorough research and consult with a qualified financial professional before making any investment decisions. ASXShort.app does not guarantee the accuracy or completeness of the data presented, nor does it guarantee future stock performance.