Shares of Sequenom, Inc. (SQNM) are among the strongest today as they gain 7%. While this might not be a household name, the company is one you may want to keep an eye on. The stock is up 190% in last 13 weeks and is sitting on a 52-week gain of 330%. Despite this market-leading performance, there are signs that the rally hasn't yet exhausted all of the potential buying demand. To see what I mean, let's start with the charts.

Chart Courtesy of Thomson Financial

Chart Courtesy of Thomson Financial

The weekly chart shows the long-term price appreciation. The daily chart highlights the accelerated buying that hit when the stock overtook its prior peak near 11. Since mid-July, the shares have been meandering in a sideways consolidation.

What is really interesting here is that despite the strong performance, there is little in the way of overt optimism. The best illustration of that is with these two graphs...

Charts Courtesy of Thomson Financial

On the left is the put/call ratio which shows a steady increase in puts (bearish bets) relative to calls (bullish bets). A look to the front-month open interest configuration shows that open interest is relatively light, but that only supports the argument that there is little in the way of overt optimism.

Meanwhile, the graph on the right shows there has been a sharp increase in short interest. In the last 4 months, the total number of shares sold short has gone from just under 2 million to nearly 9 million. Data collected by our Quantified Analysis group shows that 22% of the stock's float is now sold short.

It is also worth pointing out that this outperforming stock is still somewhat of an undiscovered gem on the Street. According to Zacks, only 4 analysts follow the stock.

The caveat to keep in mind is, of course, the potential for volatility. As I noted earlier this month with regard to agricultural stocks, you can't have strong run-ups and not expect to see some proportionally-sized pullbacks at some point. With that in mind, I would view the bottom of the recent consolidation, near 18, as a short-term support level. If the stock does break that, longer-term support doesn't kick in until the prior peak near 11.