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Chart to Watch: Overstock.com, Inc. (OSTK)

OSTK tumbled to a new annual low today, and the shares broke support in the process

by 7/11/2014 1:27:47 PM
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Shares of Overstock.com, Inc. (NASDAQ:OSTK) are swimming in red ink this afternoon, down 2.7% at $14.31. Earlier, the stock touched an intraday low of $13.89 -- its worst price since April 2013.

Notably, today's sell-off has pushed OSTK south of recent support in the $14.50 area, which had previously contained the stock's year-to-date lows. The security has been moving rapidly lower since the start of July, when OSTK was rejected by its 80-day moving average and the $17 area -- both of which formerly served as technical support.

OSTK since January 2014 with 80-Day Moving Average

No news in particular seems to have sparked today's weakness, but it's likely a welcome development for OSTK bears. Short interest rose by 2.4% during the most recent reporting period, and now represents nearly 9% of the stock's float. At the equity's average daily trading volume, it would take 10.2 sessions for all of these bearish bets to be covered.

However, with the stock suffering a solid rejection at former technical support -- and breaking down below the $14.50 area, raising the prospect that this level will also emerge as newfound resistance in the weeks ahead -- bears likely aren't rushing to cover just yet. In fact, a continued rise in short selling could keep OSTK under pressure in the future.

Looking ahead, Overstock.com, Inc. (NASDAQ:OSTK) is tentatively scheduled to report second-quarter earnings during the final week of July. The online retailer has fallen short of consensus bottom-line estimates in each of its past three reports, and OSTK suffered a single-day slide of 5.8% on April 24, after its first-quarter performance disappointed.

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