Here’s how you trade a short squeeze on Amicus Therapeutics (FOLD) (September 21, 2017)
FOLD
In this Chart video I want to look at FOLD, that is Amicus Therapeutics ( NASDAQ:FOLD ). They recently, I think it was yesterday, they were awarded orphan drug status (has nothing to do with who your parents were), from the FDA for one of their drugs. This kind of puts it on the uber fast track, that has nothing to do with somebody picking you up either.
So what are we going to do here? This stock has a third of the float short. Short interest ratio, that is the number of days to cover is almost 12, so about two and a half weeks of trading would have to go by in order for all the shorts to cover their positions. What this means is, there is kind of a little fire burning under this thing. After two big days like this, I think you want to be careful about buying it right now. This high back here, $18.00, is way too far back in time to really matter, over a year. For all intents and purposes when you get to where resistance is two years old it is not resistance; so his stock just might as well be in an all-time high, it really is.
So what I would suggest doing is, you want to be long this stock, you want to own this stock, then go ahead and do that, but I would keep a stop just below today’s open, which is 15.20. It is also basically the low of the day as well. Here is why: The only reason you are buying it is because you think this breakout still has some legs in it because of the high short interest. Good news for the company; people want to buy the stock after a month or more of sideways consolidation. So this thing has legs, I want in. And so you would put your stop just a little bit below today’s intraday low of 15.19.
The reason is because then the only way your stop is going to get hit is if the stock completely retraces today’s move. If the stock does that you don’t want to be in the stock anyway because the only reason you bought was because you are looking for more upside and you didn’t get it. So, oops, you are stopped out. This is a much more logical place to put a stop then say, “Oh, if it falls down here.” Really? If it falls down below the 50-day moving average, then you are going to sell? You are going to own a stock and hang on to it for over 15 percent and then try to figure out whether you are going to sell or not? I don’t think so. This is a stock that is actually giving you, if you think this has move upside, and I would just watch it. tomorrow morning and see how it opens, it is giving you a logical place to put your stop at a relatively tight level, so you are not really risking a lot of money here.
That is how I would trade Amicus ( NASDAQ:FOLD ). Again, high short interest. A high percentage of the float is short. This is really what you want to see in these squeezes. I think it works for me. It should work for you.
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