Another short-squeeze candidate for your bear-bashing radar is Neonode (NEON - Get Report), which develops and licenses optical MultiSensing touch and user interface solutions based on its zForce touch technology. This stock has been in play with the bulls over the last three months, with shares up sharply by 24%.
The current short interest as a percentage of the float for Neonode is very high at 26.7%. That means that out of the 30.97 million shares in the tradable float, 8.86 million shares are sold short by the bears. This is a massive short interest on a stock with a relatively low float. This stock could easily explode higher with a short interest this high if the bulls decide to move into this name with large volume buying.
If you look at the chart for Neonode, you'll notice that this stock has been uptrending over the last few weeks, with shares moving higher from its low of $5.50 to its intraday high of $6.80 a share. During that uptrend, shares of NEON have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NEON within range of triggering a major breakout trade.
Traders should now look for long-biased trades in NEON if it manages to break out above some near-term overhead resistance levels at $7.08 to $7.14 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 482,862 shares. If that breakout hits soon, then NEON will set up to re-test or possibly take out its next major overhead resistance levels at $7.94 to its 52-week high at $8.84 a share. Any high-volume move above those levels will then give NEON a chance to tag or trend north of $10 a share.
Traders can look to buy NEON off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $6.04 a share. One can also buy NEON off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.