5 Short Squeeze Candidates in the Technology Sector

Frequently, the activity of short-sellers can cause huge moves in stock prices. In particular, when a company whose stock is heavily shorted comes out with good news, it can trigger a very sharp rally in the name as short-sellers cover their wrong way bets. Also, once an uptrend has been established in a stock with a heavy short interest, the gains can be magnified by short covering. In order to pinpoint some potential short-squeeze candidates in the technology sector, I ran a simple scan looking for tech stocks that had a short interest above 20% and which were up more than 30% year-to-date. The logic behind this scan was to find stocks that could see continued strong gains in the coming weeks as a result of short-covering activity. Below, Benzinga highlights 5 names that the scan turned up which might be presenting short-term trading opportunities from the long side.

- This stock has had a strong start to 2012, but has been pulling back recently. Shares are up better than 33% year-to-date, but have lost 8.69% over the last month. At current levels, AMKR has a market cap of $982 million. With more than 21% of the float sold short, the stock could be a candidate to run higher in the second half of the year if it can re-establish its uptrend. Traders looking for a favorable risk/reward trade could get long AMKR if it retakes its 50-day moving average, which is currently at $6.05. On Thursday, AMKR has added a little less than 2% and is trading at $5.82.

- This stock has been moving aggressively higher since the beginning of the year and is already up more than 42% in 2012. Despite the persistently bullish activity in the name, BSFT still has a very high short interest of 24.54%. If these traders ever decide to throw in the towel and cover their bearish bets, it could give BSFT another big push to the upside. On Friday, BSFT has broken through a resistance level and is sitting at new multi-month highs, adding 2% to $42.74.

- This small-cap company which runs adult-oriented websites soared to start the year but has since pulled back sharply. On Friday, FFN has added 0.97% to $1.04, giving the company a market capitalization of just under $33 million. While FFN makes for a very risky investment, it could set up for a solid trade at some point in the second half of the year. With nearly 30% of the float sold short, any rally in the name could be magnified to the upside by short covering. Despite a steep sell-off in recent months, FFN has still added more than 38% in 2012.

- Formerly billed the "Facebook of China," Renren is a social networking platform in China. Although shares have fallen more than 64% since the company's May 2011 IPO, the stock has been on fire in 2012. Shares have risen more than 80% year-to-date, and may continue to soar into the second half. With a massive 72% short interest in the stock, RENN could climb quickly if some of these short-sellers decide to begin covering their bets. The stock is trading more than 252% above its 52-week low and was last trading at $6.41.

- This stock has jumped again on Thursday, adding 3.17% to $31.55. Shares have risen better than 38% in 2012 and the rally is likely being bolstered by short-covering in the name. With nearly 23% of the float sold short, a potential squeeze is always possible in SFLY. The stock is showing good near-term momentum and is trading 5.36% above its 20-day moving average and 5.10% over its 50-day moving average.