ELECT 24 Top Ad

The Surging Retail Stock Overdue for a Short-Squeeze

Overstock short sellers could be ready to throw in the towel

Oct 26, 2017 at 2:34 PM
facebook X logo linkedin


Overstock.com, Inc. (NASDAQ:OSTK) is having another huge day, with shares of the online retailer rising 8.2% to trade at $44.75, and earlier hit a 12-year high of $45.80. This is just more of the same from the equity, which has been on a breathtaking ascent since early August, when it was traded below $15. With a 14-day Relative Strength Index (RSI) of 76, OSTK is now overbought, but D.A. Davidson is calling for more upside with earnings due after the close next Wednesday, Nov. 1.

Specifically, the brokerage firm this morning boosted its price target to $57 from $36. This suggests extended upside of 27.4% from current levels. Given Overstock's post-earnings history, and a potential short-squeeze situation, such a move may not be as crazy as it seems.

For instance, the shares have moved higher in the session after earnings in seven straight quarters, including a nearly 7% jump last quarter, and a huge 19% surge after last November's release. Going back eight quarters, OSTK has averaged a single-day swing of 10%, and this time around the options market is pricing in a 7.1% move for next Thursday.

Meanwhile, data from Schaeffer's Senior Quantitative Analyst Rocky White suggests Overstock short sellers are facing huge losses. In fact, White's research points to a loss of over 96%, on average, for those shorting the security -- the most of any equity on his list. If the company again delivers strong quarterly results and the stock rallies, a mass exodus of short sellers could result in additional tailwinds.

A number of options traders are certainly expecting more upside. During the past 10 days, the December 40 and 50 calls saw the largest increase in open interest, and data points to buy-to-open at each, especially the 40 calls. Those buying positions here expect the shares to rally higher in the coming months.

It should also be noted that Overstock.com stock seems overdue for even more bullish analyst attention. That's because, amazingly, D.A. Davidson is currently the only brokerage firm covering the equity. It's hard to imagine yet another huge post-earnings move going unnoticed by this group, and positive attention could act as yet another upside catalyst.

overstock.com stock

 

Biden’s government just announced a new government "stimulus program"...

And it could hand you a payment for as much as $7,882 — each quarter.

See, it has to do with a recent 19-page memo from Biden’s office...

Directing the government to once again send a form of "stimulus payments" to the mailboxes of Americans during these difficult times.

Better still, you can collect these payouts every single quarter — for life...

Payments run as high as $7,882... And it only takes five minutes to sign up.

I call this the "Stimulus Stipends" program…

And Forbes recently declared that you can "retire rich" thanks to this program.

So if you want to start cashing in your quarterly payouts — courtesy of the U.S government...

Discover how to receive your FIRST "Stimulus Stipends" payment for up to $7,882 here. 
 (ad)
 

election 2024 report

                                                  AD                                                  
best AI trade you can make today…?
(it’s not MSFT, GOOGL, AMZN or AAPL)

                                                  AD                                                  

 
 

VOLATILITY SCORECARD

 


                                               AD                                                    
Crazy Opportunity!! Tiny AI Stock just $3
“This Type of AI Will Be Worth “Ten MSFTs.”

                                               AD                                                    

 
4 AI STOCKS TO BUY NOW
 

                                                  AD                                                  
best AI trade you can make today…?
(it’s not MSFT, GOOGL, AMZN or AAPL)

                                                  AD