The third reason I like ORMP here from a trading perspective is because the stock is heavily shorted. The current short interest as a percentage of the float from ORMP is pretty high at 11.6%. According to the most recent data, ORMP has a tradable float of 7.63 million shares and 886,000 of those shares are sold short by the bears. This is the type of situation that's begging for a squeeze since we have a significant catalyst that's less than a month away.
The final reason I like ORMP from a trading standpoint here is because a major shareholder just bought 75,000 shares, or above $796,000 worth of stock, at $10.62 per share. This same beneficial owner, Regals Capital Management, also bought 51,000 shares, or about $800,000 worth of stock, at $14.96 per share in early February. A major holder of ORMP shares is in the market buying stock right now -- that should be enough to make any trader take notice.
All things considered, this is a situation that could produce a monster short squeeze as the catalyst for ORMP gets closer. Remember, this is a trading opportunity I am highlighting here -- nothing more and nothing less -- but it's an opportunity that I think could potentially bank big dollars if ORMP can start to trend in the right direction and soon.
From a technical perspective, this stock has started to find support right around its intraday low from its previous gap-up-day zone from last December that took the stock from $6.83 to almost $14 a share. Shares of ORMP are bouncing sideways here right above the 200-day moving average, and the stock is starting to trend within range of triggering a major breakout trade. That trade will hit if ORMP manages to take out some near-term overhead resistance levels at $11.80 to $12 a share and then $12.50 a share with high volume Look for volume on that move that hits near or above its three-month average action of 734,136 shares.
Traders can look to buy ORMP off weakness as long as it's trending above its 200-day moving average at $10.25 or above its recent low of $9.64, or look to buy it off strength once it clears those breakout levels with strong volume. Keep in mind that I would want nothing to do with this stock from the long side if it broke below $9.64 with volume, since then the risk would be that ORMP could fill the gap that started at $6.83 last December.
If this stock does break out soon, then it could easily squeeze big and tag $14 to $15 a share or even $16 to $18 a share. The upper end of these targets would not be hard to hit, considering how oversold and heavily shorted ORMP is, so keep this name on your trading radar.
-- Written by Roberto Pedone in Delafield, Wis.
At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.