Momenta Pharmaceuticals

Another stock that was displaying some notable relative strength today is Momenta Pharmaceuticals ( MNTA), a biotechnology company specializing in the characterization and process engineering of complex molecules. This stock is off sharply so far in 2011, by over 25%.

The short-sellers recently did a number on this stock, knocking it down from $17.82 a share to a recent 52-week low of $10.15 a share. That massive slide occurred after U.S. regulators approved a second generic version of the popular blood-thinner Lovenox, also known as enoxaparin, which could eat into Momenta's sales of its version of the product.

If you take a look at the chart for Momenta, you'll see that this stock might be marking a bottom today since the stock has started to bounce off of some longer-term support at around $10 a share. That support area dates back to late 2009, so if MNTA can manage to hold above that level, it could mean the stock has bottomed.

Recently, shares of MNTA were up 4.7% at $11.12, and volume was tracking in very strong on the day, with over 3 million shares traded. This volume is well above its three-month average action of just 922,000 shares. If MNTA can manage to close up today during a massive market decline, then this stock is one you have to put on your radar for higher prices in the near future.

One could be a buyer of this stock off any weakness and simply put a stop just below $10 a share in case the bottom is not here just yet. Also keep in mind that the stock's relative strength index reading is showing a 26, which is an extremely oversold condition. If $10 holds, then this stock could easily bounce 20% or more from here.

Keep in mind that this is heavily shorted stock, with over 15.3% of the tradable float currently sold short by the bears. If this stock has now put in a bottom, then the shorts could lock in some of their wining bets and buy the stock back, causing it to rally sharply. Remember, the bears are up huge in a just a few weeks, so if the stock can hold above $10, then look for a big rally in the near-term.

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