Schaeffer's Daily Market Blog Features: Kendle International, Pfizer, XM Satellite Radio Holdings, Diodes, and Answers.com

Kendle International (NASDAQ:KNDL) is a stock that I don't think I've covered in this forum before. According to Hoover's, the firm provides contract research and development services for biotechnology and pharmaceutical companies, including Pfizer (NYSE:PFE). I've seen nothing on the newswires, but the stock gapped higher on the open and currently leads the way on the Nasdaq, up more than 18 percent at $29.43 at last check. Something is clearly afoot. A few days ago, the stock breached the support of its 10-day and 20-day moving averages, but it leapt above both of them this morning.

There's considerable short interest on the stock, with more than eight percent of the float sold short. Those short sellers might be scrambling this morning to cover their positions; remember that when you're long on a stock, the worst that can happen is you lose your money, but when you're short, you can lose more than 100 percent of the sum you scooped in when you sold the stock. Think about it: if you sold for $10, say, and you bought back for $30, you said goodbye to $20, which is twice the original sum involved.

According to Zacks, only two brokerages rate KNDL, so there's plenty of opportunity for newcomers to show up at the party. Fresh coverage would certainly draw in new money and give the stock a boost.

Wrapping up, the stock is approaching overhead resistance at its 10-month moving average, which might slow it down. That trendline is in the region of 30.80, so watch for a close above that level. On our Schaeffer's Equity Scorecard, KNDL ranks just 3.0 out of 10 indicating that the path of least resistance lies lower. Nevertheless, let's wait to find out what caused the blip on the chart, and take another look at the scorecard tomorrow. It's updated every day, and tomorrow it might tell a different story.

12:05 PM Credit Suisse Upgrades XM Satellite Radio

The second-strongest stock on the Nasdaq today is XM Satellite Radio Holdings (NASDAQ:XMSR), which gapped higher today after Credit Suisse upgraded its rating on the company to "outperform" from "neutral," citing valuation. At last check, the stock was up more than 10 percent at $13.85. Sentiment on XMSR is mixed. Short interest fell more than 22 percent in August but 12.5 percent of XMSR's float remains sold short. This is a good sign, because the short sellers might decide to buy back some of their bearish bets to limit losses, which could push the price higher. Turning to the options pits, XMSR earns a Schaeffer's put/call open interest ratio (SOIR) of 0.67, telling us that calls outnumber puts by a ratio of three-to-two. Looking back at the past 12 months, we find that this ratio is in the middle of the range, so sentiment amongst the options crowd is rather neutral. According to Zacks, 10 analysts rate XMSR a "strong buy" and another three see it as a "buy," leaving plenty of room for downgrades. There is only one "strong sell" rating to balance the extreme optimism, but the 10 cautious "hold" ratings leave considerable room for further upgrades. All in all, I'd watch this one. The stock entered a clear downtrend last September, but a bounce from support at the 10 level, seems to have pulled in the buyers. This week it is trading above its 20-week moving average, above which it has not closed since September 2005.

12:26 PM Diodes Charges

A diode is an electronic component that allows current to flow in one direction but not the other, which is kind of appropriate because Diodes's (NASDAQ:DIOD) chart more or less goes in just one direction: up. In fact, the stock hit an all-time high again this month. The maker of discrete semiconductors such as diodes, transistors, and rectifiers for clients from Delphi (DPHIQ) to Intel (INTC), is doing very well today after the company lifted its third-quarter revenue outlook. It now sees sequential growth in the range nine percent to 11 percent compared to its second-quarter revenue of $82.7 million, up from the prior guidance of four percent to seven percent. With almost 11 percent of the float sold short, we could be seeing a short-covering rally. According to Zacks, just five analysts cover the stock, leaving scope for fresh positive coverage to give the stock a boost. So is DIOD a buy? Jiminy Cricket might suggest you let your conscience be your guide, but I'd say the 10-month moving average would serve you better. It looks as if people might be buying on the dips.