Pernix Therapeutics Holdings Inc (NASDAQ: PTX) is flying in the trading session this morning. However, if you’re looking for news, you’re not going to find any. The company hasn’t issued any press releases or SEC filings today. Nonetheless, we believe that we’ve found the cause of the gains. Today, we’ll talk about:
- Why PTX stock is headed up;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Why PTX Stock Is Headed Up
As mentioned above, Pernix Therapeutics is having a great day in the market today. However, the movement is leaving some investors scratching their heads as no news has been released. So, what’s the deal?
Well, without a clear catalyst for the gains, anything mentioned here would be speculation. Nonetheless, we believe that the gains in PTX are ultimately the result of a short squeeze.
Recently, the short percentage of share volume has been climbing. In fact, in the past five trading sessions, the short percent of volume has been 52.66%, 49.02%, 43.01%, 56.62% and 58.55%. Looking further into the past, we see more of the same.
At the end of the day, the high short percentage of volume set the stage for a short squeeze. At the end of the day, shorts only make money if the value of shares drops. So, what happens is that the value of a highly shorted stock will rise. From there, the shorts start to abandon ship.
As more and more shorts continue to abandon ship, they must replace the shares that they borrowed to sell short, leading to a buying frenzy. Ultimately, this is the basis of a short squeeze, and seems to be what is taking place on PTX at the moment.
What We’re Seeing From The Stock
While news is the cause of nine out of ten moves in the market, today’s move in the value of Pernix Therapeutics had nothing to do with news as no news has been released. Ultimately, this move is a technical one, and considering the high level of recent short interest, it may be far from over. Nonetheless, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:54), PTX is trading at $2.09 per share after a gain of $0.91 per share or 77.15% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on PTX. In particular, we’re interested in following the short sqeeze to see just how high it pushes the stock. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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