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Biotech / Medical : EntreMed (ENMD) -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (847)	5/7/1998 12:02:00 PM
From: Tom Caruthers	Read Replies (3) \| Respond to of 2135

From Briefing.com (today) It is inevitable: Heavily shorted stocks will always make a rally attempt. You may think that even at $27 per share, after tumbling 60 points from its Monday intraday high, EntreMed (ENMD 32 1/2 +1 3/8) shares are still overvalued. This is probably the case. But daytraders don't really care about value. Once a stock makes the type of outrageous move that EntreMed did, finishing Monday up more than 200%, the stock will inevitably attract a gang of shortsellers. Typically, the stock that skyrocketed on say Monday, begins to tumble by mid-Tuesday, and continues its collapse for at least another day. However, after much of the air has been taken out, daytraders begin looking for opportunities to put pressure on the shorts. How do they know that the stock is heavily shorted? One sign is when they attempt to short the stock themselves and find out that there are is none available to borrow -- anywhere. Once this occurs, the focus begins to shift from shorting the stock to getting ready to pile on once it looks like daytraders are ready to begin squeezing the shorts. With EntreMed, that event began to unfold once the stock hit $27 this morning. The $27 mark was not necessarily an important support level, it just happens to be where buyers began to converge on the stock. Once the issue began to uptick, traders poured in.. When trading this type of play, one of the first things that should pop into your mind is: What are the other potential plays? In this particular case, the first stock that should have come to mind was Boston Life Sciences (BLSI 4 1/4 +21/32), another biotech stock with a potential cancer cure, that experienced a triple-digit gain on the coattails of EntreMed. This stock is the obvious play as a secondary short-squeeze play because 1) It is also high-profile, after company's CEO was interviewed on CNBC; 2) Stock was one of few biotech plays which ran up with ENMD that was shortable. So, what are these stocks likely to do going forward? Before K-tel, we would have said that both of these stocks would continue to trend lower, despite intermittent, temporary rallies. But that was before traders began their love affair with K-tel and before the recent impressive rebound in General Magic (GMGC) shares. The one thing that shorts will have in their favor on these two stocks is that the companies are not likely to engage in a campaign of press releases. The rebound in KTEL and GMGC can be attributed almost entirely to the companies igniting the stocks by issuing a press releases on average every few days and sometimes several in one day