Schaeffer's Trading Floor Blog

Stocks at New Highs: BioMarin Pharmaceutical and Seattle Genetics

Heavily shorted BMRN and SGEN are both exploring new highs in today's session

by 10/7/2011 2:43 PM
Stocks quoted in this article:

With a fresh wave of euro-zone jitters sweeping the Street, very few stocks have trekked into annual-high territory today. The NYSE reports just seven securities at fresh 52-week peaks, compared to 24 new lows. Likewise, the Nasdaq has racked up seven annual highs, along with 38 annual lows. Among the elite advancing equities today are BioMarin Pharmaceutical Inc. (BMRN - 33.66) and Seattle Genetics, Inc. (SGEN - 21.83), which are both defying short sellers' bearish expectations.

BMRN price chartStarting with BMRN, the shares tagged an intraday best of $33.78, marking a new three-year high. The equity is currently sitting on a healthy 2011 gain of 24.3%. Since July 2009, the stock's uptrend has been supported by its 10-month moving average, beneath which BMRN has suffered only one monthly finish in the intervening years.

With the shares blazing a trail into multi-year high territory, short sellers could soon be forced to admit defeat on BMRN. Short interest currently accounts for a hefty 8.3% of the stock's float, and it would take 8.2 trading days, at BMRN's average daily volume, for all of these shorted shares to be covered.

SGEN price chartMeanwhile, SGEN topped out at $22.37 today, which represents an all-time high for the equity. The shares have racked up a year-to-date gain of 43.2%, with the most recent leg of SGEN's uptrend underlined by support at its 10-day and 20-day moving averages.

Not unlike BMRN, the stock looks like a solid candidate for a potential short-squeeze rally. Following a 19.2% increase during the past two reporting periods, short interest now represents more than 26% of SGEN's float. This translates into 17 days' worth of pent-up buying pressure, at the stock's average pace of trading.

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