Dendreon (DNDN) is currently up about 17% (slightly off intraday highs of +19.5%). The pharmaceutical company has a 20% net float short and is attempting to recover from a massive gap down last Summer that came when one of its signature drugs failed to gain FDA approval.
Technically, DNDN had been a tight flag pattern for most of 2012, which is what brought the stock onto my radar. DNDN had been trading in a range around $13-15, and had gotten even tighter in the last eight days. Technical traders began stalking the $15.20 level as the trigger for a trade in the coming weeks.
It didn't take long this week for the move to happen this morning. DNDN broke and held above that level in the first 30 minutes of trading today and hasn't looked back. When a heavily shorted stock breaks above such a key level, it often triggers panic and short covering, which is likely contributing to the stock's move today.
I am taking most of my profits on my calls today, but it is very possible that DNDN could see more upside from here.
*DISCLOSURES: Long DNDN calls
