One way to pick stocks is to watch short interest for clues. Paul Hickey, Bespoke Investment Group co-founder, told CNBC the buys he's making based on his short-watching method.
First, the strategist said he's sticking with predictions and picks he'd made on July 22 -- when he called for oil prices to sink. Hickey said a bear market for crude would boost Hasbro and Valero.
The toy maker now "is a little overbought, but we still like it. ... And oil is still coming down," so the refiner "should enjoy even better margins."
Watching short interest, Hickey suggests buying:
- health care services provider Pharmerica , whose short interest is over 16 percent of the float.
- Microsemi, a small-cap processor play on defense and health care. He says its short interest is 16 percent of the float; plus, Microsemi raised its guidance in its last quarterly report.
- Finally, Hickey recommends buying Internet movie-rental company Netflix.
CNBC Investor Intelligence:
Disclosure information was not available for Hickey or for his company.