Another January Effect candidate is Sequans Communications (SQNS - Get Report). This is a fabless designer, developer and supplier of fourth-generation semiconductor solutions for wireless broadband applications. The short-sellers have cleaned up on SQNS in 2011, with the stock off by over 73% so far this year.
This stock once traded as high as $19.50, but since then, it has plunged to its current price of $2.19 a share. That's a massive drop for any equity, and it makes SQNS a great candidate for a January Effect play. This stock also has a low float, with 16.79 million shares and over 1.04 million of those shares sold short. That's more than enough bears to spark a decent short squeeze since the float is so small. Sequans also has $1.89 in cash per share on its balance sheet, which will help make this stock a more attractive play since it currently trades at around $2.19.>>5 Stocks Setting Up to Break Out My trading plan for SQNS is to consider getting long if that recent low of $2.12 holds up in the next few days. If that low doesn't hold, then look for the first decent up day when volume is tracking in near or above its three-month average action of 476,930 shares. Look for any strength in this equity early in the morning where volume is tracking in strong. I would simply use a mental stop that's 10% below your buy point. If SQNS does see January Effect buying, then look for the stock to fill some of that large gap down from a few weeks ago. That could mean that SQNS has the chance to double form current levels.