$LGND TA 10/2/13 Breakout ... & the squeeeeezzzzeeee is just getting started.
As expected Duavee (Aprela) was approved, and we got a nice pop that broke the falling resistance line (defined by the close on 7/22 and 8/29, before gently pulling back into converted support of the prior 9/10 resistance. Today we spiked again through this same resistanace line (now throughly broken) and pulled back with that resistance trend line acting as support. Classic high base price action.
At the last official report, there was a massive short interest in Ligand, making it one of the most shorted stocks of the Russell 3000 with about 2.4 mill shares. When the ave daily float for the same period was about 1/10th that amount, such yeilded about 10 days to cover. We expect more shorted on the swoon after the last filing date on reports that BVF had sold about 10% of their holdings in their legacy funds. Anything above 7 DTC days is considered highly shorted and at risk to trigger rounds of short squeezes. All music to the ears of the longs.
So with this breakout on the daily chart, we are now focusing on the intraday again as we expect to be back on New 52wk high watch soon. I'm been watching the developing near term resistance line (5 min chart) 10/3 PM3:05 (@$49.19) and 10/4 AM10:45 (@$48.78) when this trendline breaks to the upside, we expect to see a quick sprint to test $49.41, $49.48 and $50.85. Yesterday's volume was less than a half million shares and we know some of that was bought by longs like us (we filled out 1/2 T3 on the Duavee news and just added the other 1/2 of the T3 on this 5min trend breakout), so there is A LOT of shorts yet to cover. Our plan is to sit on all our shares as we expect to soon see new 52wk highs and the march to the Roth PT of $65. Still time to buy....