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Two of the most manipulated stocks in America -- right up there with Overstock.com (OSTK) -- are Novatel Wireless (NVTL) and Sierra Wireless (SWIR). These "twin" stocks track each other's price movement hour by hour, day in and day out.

Not that they move as a perfect match. Some days the black box traders maintain a neat $1 gap between the two, selling just enough of one and buying just enough of the other. Occasionally their prices are allowed to drift together, like oppositely charged magnets. When they meet, however, their polarities reverse and the repulsion is often violent. Many days, their cumulative volumes stay within a couple of percent.

There is a reason for their unity. They are direct competitors, both in the business of making wireless modems for mobile computing. Their share counts are a few percent apart so their market caps are nearly identical.

Each stock trades as though only one thing matters--specifically, what the other is doing. The fundamentals are ignored. Each firm reported earnings of around 25 cents per share in the recent quarter, compared to losses in the quarter 12 months earlier.

That kind of growth -- paired with annualized earnings of a buck a share -- ought to yield a price better than the mid-teens, where both have been lately. The math is simple. A suitable growth P/E ratio of, say, 40 would produce a share price around $40. At 50, it would be $50.

The ball and chain has been the substantial short ratio. SWIR's is in the 20 percent range and NVTL's is around 30 percent. Needless to say, the potential for a squeeze is substantial. That's what happened in the 18-month period beginning in October 2002, when SWIR moved up 1,800 percent, from $2.50 to $45 per share. NVTL made a similar move, though its rise began a bit later, right after New Years 2003.

A very bad time to be short, then and perhaps now.

Disclosure: none

Source: Novatel, Sierra Wireless: A Seasonal Squeeze?