The broad market is bouncing. That is all it is doing.

The S&P rallied off a low but the trend has not changed. A counter-trend rally means the market is bouncing up inside a downtrend, not reversing out of one. The moving averages are still stacked in the wrong order. This is a time to be selective, not aggressive.

Which is why Acadia Healthcare (ACHC) stands out.

Acadia Healthcare runs inpatient psychiatric hospitals and behavioral health facilities across the country.

The stock was at $11.43 at its 52-week low. It is now in the mid-twenties. I have been trading in and out of this name for a while. This week the daily squeeze fired long and I think it has room to get to 20.

Here is the setup. ACHC beat earnings, coming in above estimates on both revenue and forward guidance. That kind of result in a choppy market tells you something. Real money is moving in. Then look at the float situation.

The float is the total number of shares available to trade. Thirty percent of ACHC’s float is currently short, meaning traders have borrowed shares and sold them expecting the price to fall. When a stock with that kind of short interest starts moving up, those traders have to buy back to cut their losses. That buying pressure adds fuel. Traders call it a short squeeze.

Layer the daily squeeze on top of that. A squeeze happens when a stock stops trending and compresses into a tight range. Think of it like a spring being pushed down.

When it releases, the move tends to be fast. The daily squeeze on ACHC fired long this week, meaning that compression is breaking to the upside.

Your Action Plan

Trend. Pattern. Squeeze. All three are pointing in the same direction.

The entry level, the stop, and the exact trigger I need to see before getting in are in this week’s watchlist video. Those are the four things that turn a setup into an actual trade. Without them you are just watching a chart.

Watch the full video below.