Local.com (NASDAQ: LOCM) is often the center of buyout speculation from big companies like Google, Groupon and Living Social. Living Social, who has been buying up companies left and right is a prime candidate to gobble up Local.com’s footprint, especially at these levels.

Knowing how hot the ‘daily deals’ sector is becoming with the Groupon and Living Social IPO’s right around the corner I went shopping for a stock that could be lifted by such catalysts. Having scored almost $10,000 in verified profits on LOCM in the past I couldn’t help but check out the chart earlier this week. What I saw was an excellent trading opportunity between $3.20 and $3.80 and when a big bid showed up at $3.32 I immediately bought 5,000 shares at $3.33 and alerted my subscriber by text and email on Wednesday.

Now understand, I don’t base my trades on buyout speculation, but it is a known catalyst that can lift a stock price. My alert on Local.com (LOCM) was primarily based on shares trading just off the 52 week low $3.17 with a solid trading range between where I bought and $3.80 on the chart. My second reason for buying  5k LOCM at $3.33 earlier this week is the large short interest on the stock which is last reported as being around 10 days to cover based on the daily volume. With a reported short interest of over 4,500,000 shares and a tiny market cap of $74m it’s obvious LOCM can fly as shorts get squeezed. Then I consider the Groupon and Living Social IPO’s and LOCM’s buyout potential as catalysts to fuel the move and you have the perfect storm.

Today I added 2,500 more shares to my position on LOCM at $3.40 and will consider buying another 2,500 shares at $3.36 or higher if justified. As shares continue to creep up I can sense shorts getting nervous so with any luck we’ll see profit on this trade in the next week or so, possibly sooner.

Click here to see my $6,300 score the first time my members and I played LOCM for a short squeeze.

Long 7,500 LOCM at $3.36 with a goal around $3.80 and I reserve the right to buy more or sell at anytime.