Valeant Ripe For A Short Squeeze? Here's A Technical Look

Valeant Pharmaceuticals Intl Inc VRX shares are trading higher by $3.50 at $85.27 in Monday's session. For third trading day in a row, it has made a higher low and is poised to close higher for third day in a row.

The issue, which made its all-time high in August at $263.81, reached $73.32 last Wednesday. That takes the issue back to levels not seen since May 2013 when it bottomed at $71.99.

Another sign that bears may be exhausted is the relatively tight range in Monday's session. At this time, it has been confined to a $5.38 trading range ($80.62 to $86). That is compared to its 20-day average trading range of $14.03. In other words, there are plenty of longs still liquidating and new shorts coming in, but those covering shorts or attempting to go long are raising their bids.

The issue will also have its smallest intra-day range in the past 37 trading sessions since September 18. Finally, the issue sports a modest 3.35 short interest float, but has rapidly increased over the last few weeks. Therefore, any type of sharp rally would send some of more recent shorts scrambling for cover.

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

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