It looks like Rambus, Inc.(NasdaqGS: RMBS) might be close to squeezing some shorts based on the recent price action. With over 11% of the float being short, and a history of quick powerful moves, this is a situation that bears watching. Overall, RMBS cleared a 6 month long base in December, and has been trading in a wide range since then. It seems every time RMBS manages to rally into the $25.50-$26.00 range, it is met with an onslaught of profit taking or short selling. It then falls back towards the original breakout area near $20, where there is no shortage of buyers.
It looked like RMBS was in the process of forming a double top over the first three months of this year. It had a weak bounce in February that only managed to reach the 50-day moving average near $23 where it began to rollover. It looked like RMBS would head back down to test the $20 area again, only this time with momentum on the side of the sellers. However, RMBS didn't breakdown. It began trading sideways until surging past the small consolidation near $23 possibly trapping some early bears. This move was also accompanied by a surge in volume. While RMBS still has plenty of overhead resistance, this move could be helped by a short squeeze if indeed this is a failed topping pattern. It looks like a retest of $26 is in the works as long as RMBS can hold above $22.50-$23 in the immediate future.
With the long history of surprise news due to the ongoing patent litigation in RMBS, traders may wish to look at options for protection or even as a substitute for common shares. Overall the pattern looks very constructive, but there is always a chance of an unseen news event in this stock.
Good Trading,
Joey
I wrote an article on Wednesday night for Investopedia on Gold Miners and how they are at a critical juncture right now. In the article, I highlighted a few stocks to watch, but found another one today that I hadn't traded before. It looks pretty decent on the daily chart and has had good relative strength when compared to the other miners. Before revealing the chart, here is the introduction to the article along with the link for anyone interested.
With the recent strength in the U.S. dollar, gold and the companies that mine it have been mired in a correction. While these stocks have been correcting their move to recovery highs since late last fall, from a broader perspective it's clear that these stocks have technically been in a wide-trading range. The mining stocks recently tested the bottom of the range and turned higher, hinting that an end to the correction could be near. Currently, the gold miners are in a critical area on their charts, with a break above near-term resistance hinting at a resumption of the uptrend, and a move lower hinting at a larger topping process.
The additional stock I found is Allied Nevada Gold Corp. (Public, AMEX:ANV). While the price action in ANV is very similar to some of the others highlighted in that article, I like that it is close to an all time high. ANV also rallied a little longer than the other miners, carrying over into the New Year rather than topping out in November.
ANV has been correcting the past rally much like the other miners, with the consolidation taking place in a much larger lateral trading range. ANV has held the low $12's on a few occasions and that is a clear support level. ANV is currently in the middle of the trading range, but the recent move above $14.50 is a positive for it. This was an a level of importance as shown by a few turning points in the stock at this level. It appears that ANV is headed for a retest of the recent highs after this move. It may be emerging as one of the leaders in this group from a price performance perspective and I will be adding it to my watchlist.
Good Trading,
Joey
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