Catabasis Pharmaceuticals Inc (NASDAQ: CATB) is flying in the market this morning. However, if you’re looking for SEC filings or press releases, you’ll be hard pressed to find any. The company hasn’t issued anything. Here’s why it’s headed up:
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CATB Stock Seems To Be The Sympathy Play Of The Day
As mentioned above, Catabasis Pharmaceuticals stock is flying in the market this morning, but there has been no news from the company that would act as a catalyst. Nonetheless, this seems to be a sympathy play.
When other companies in a sector see tremendous gains as a result of their catalysts, investors tend to look for new opportunities with the same potential for growth. If the investing community latches onto a single ticker, we tend to see incredible volume, sending the value of that stock upward. That seems to be what’s happening with CATB, as its peears NanoVibronix (NASDAQ: NAOV), Auris Medical Holding (NASDAQ: EARS), and Second Sight Medical Products (NASDAQ: EYES) have all seen recent tremendous gains.
To add to the potential here, there has been quite a bit of short interest on CATB stock recently. When a stock that’s heavily shorted moves toward the top, the shorts start to lose their figurative shirts. As such, those in short positions race to purchase shares to cover their positions in what’s known as the short squeeze.
With the heavy short interest on the stock, and sympathy buying leading to declines, shorts are surely running for cover. Moreover, the heavy short interest suggests that there may be plenty more room in this run.
If you’re not an experienced trader, it may be best to stay away from short squeezes and focus on fundamentals when making your investment decisions. While there are plenty of reasons to consider an investment in CATB, getting greedy in the midst of a short squeeze shouldn’t be one of them.
Nonetheless, if you’re an experienced trader and you know the risks associated with trading in a highly volatile short squeeze, there’s likely plenty more room for gains.
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The Bottom Line
The bottom lien here is that Catabasis Pharmaceuticals didn’t need to release any news today. The stock was chosen by the investing community as a sympathy target, sending the shorts running for cover and sending the stock screaming for the top. All in all, this could be the beginning of a very big run!
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