|Radient Pharmaceuticals: Millions of Naked Short Shares Still Outstanding|
|Wednesday, 05 January 2011 12:06|
As we told our subscribers first, this morning, Radient Pharmaceuticals (AMEX:RPC) released a poorly written press release indicating that one state government program within India (of several where the company has agressive sales efforts underway) is placing an order for the company's blood cancer tests worth $10 million or more in revenue.That is the largest sales order from the company to date, yet before the market opened, a couple of hundred thousand shares were dumped by the shorts to make it appear as though the news was bad (dropping on low volume).
Today's news is a fundamental event that should affect not only earnings and projections, but the company's (micro) market cap as soon as the street digests it. This is a company with a $50 million cap. A $10+ million dollar order is going to affect that cap. Big money guys are starting to buy back into the stock now and it is quite conceivable that the stock will continue to climb until the end of the day. Remember, this is not your typical biotech play waiting for an FDA approval for sales to begin. This company has finally reached the commercial stage and is set to start generating profits from multiple countries and partnerships via multiple sales orders.
Another very important thing has not changed: The naked shorts must continue to cover. There are still many millions of naked shares that must be settled and those brokerage firms have to buy. With or without positive news. In fact, brokerage firms familiar with RPC situation tell us that they estimate approximately 40 million naked short shares are still outstanding and still due to be settled. The stock continues to be listed on the Reg-Sho compliance website this morning: http://regsho.com/tools/short_list.php?src=2,5 and these naked shorts want to pay as little as they can for these shares.
From a technical analysis standpoint (see chart below), the stock was due for a minor correction after the latest jump. The gap which was formed yesterday has now closed. The lower intra-day prices have been rejected by the longs and yet another bullish candle with a long tail ( which indicates more buyers than sellers) is forming.
As we told our readers at $.40, $.60 and $.90, this stock should continue higher given the unsual circumstances here. In fact, if it breaks $2 in the very short term, it could easily go to $3 without much technical resistance given the big volume, attention and pending news in the stock.
Disclosure: Long RPC