Shorts as we know are in a difficult position. Many are underwater having opened positions below 4.50. And over the last couple of months Synta has delivered good news on tumour spread eradication, breast cancer complete response, and the new platform.
So shorts are still in, many covering but some upping their bets, because they feel the nearest catalyst is the upcoming Galaxy update. Their thinking is that Ganet. is a no go in lung cancer, given the lack of statistical significance in the June data release, and if the upcoming Galaxy update does not show better data, the stock will sell off on expectations of a phase 3 failure. The shorts would then look to cover down below 5, take a slight loss, and then the further out catalysts such as breast and the new platform would start to slowly push the share price back up.
That is their game plan. but the technicals and the very poor positioning of the shorts may force them to cover en masse before their plan develops. And if the patents look defensible and promising, then that may bring forward the platform catalyst in the minds of investors, bidding up the share price and forcing shorts to throw in the towel. Also, a strong breach of 7.10 and a move towards 9 may set off the squeeze simply because the shorts will be significantly underwater. With the shares hard to borrow, shorts are going to be paying over 20% interest to hold their positions which are already at a loss. That won't go on for long........
Don´t forget to overal market events. Shorts has 3 chances to see markets down – war in Syria and FED tapering is avoid, so debt ceilling is last hope. This political tango start this week, jive next week and roc´n ´roll in mid october. Volatile biotechs like Synta could acting wild. But…debt ceilling wil be fix somehow, in october we will see Enchant phase 2 results, maybe some leak about Galaxy or HDC. But next 3-4 week could be hard.
ranlouie: Yes, there is a high percentage of shorts. That is why JFK is predicting a short squeeze in the near future. He has said they are counting on unfavorable interim results from the lung cancer testing in order to hold their $7.10 resistance level and drive the longs back down. My question to JFK is: How sure are we that the shorts aren't right? Will the interim lung cancer results released next week going to take us over the $7.10 resistance level, or will they send us back below $6 again? It seems to me we are approaching a massive showdown next week. Frankly, I need more reasons to believe (and reason that I can understand) why the lung cancer results are going to please everyone this time.