Can Human Genome Sciences (HGSI) Repeat 2009?

12/25/2009 12:01 am EST


Nick Perry

Equity Options Trader, Schaeffer's Investment Research

In terms of year-to-date performance, Human Genome Sciences (HGSI) is one of the leaders with a gain of more than 1100%. As recently discussed, the shares have been locked in a stair-step uptrend and they are now testing the upper boundary of the current congestion zone.

The sentiment profile shows that analysts are fairly enthusiastic. Given the incredible run, it is justifiable to see some optimism, so there isn't much of a contrarian read there. However, the short interest page does offer an interesting fact. According to data collected by our quantified analysis department, 12% of the stock's float is sold short.

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The daily chart below highlights the stair-step action. Quick spikes have been followed by consolidations, and then the pattern repeats. One point that stands out from the short interest page is that the number of shares sold short has been dropping since August. The buying demand from this covering could be helping to fuel the rally. With that in mind, it will be worth watching how this potential breakout plays out.

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By Nick Perry of Schaeffer’s Trading Floor Blog

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