This Retail Stock's Shorts Are Getting Crushed By Bitcoin

OSTK's short-lived pullback from multi-year highs was contained by a key trendline

Dec 7, 2017 at 2:15 PM
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Shares of Overstock.com Inc (NASDAQ:OSTK) are soaring today, as bitcoin surges past the $16,000 level. This isn't the first time the retail stock has gotten a lift from the cryptocurrency, with OSTK gapping higher throughout September and October on news the company's subsidiary tZERO, would start a digital coin exchange. The retailer also accepts bitcoin payments. At last check, the equity was up 6.5% to trade at $45.40.

Looking closer at the charts, OSTK had a meteoric rise in from August to November, with the shares surging nearly fivefold from their Aug. 4 lows near $14.30 to their 12-year high of $65.70, hit on Nov. 27. After notching this notable milestone, the shares staged a quick retreat back the the $42 level -- home to the equity's 50-day moving average, which has served as both support and resistance in 2017 -- but have since bounced.

Nevertheless, the shares are still boasting a 200% six-month return -- even in the face of intense selling pressure from shorts. Since the May 15 reporting period, short interest on Overstock shot up 432%. Not only does OSTK's ability to surge amid this short selling speak to its underlying strength, but these skeptics are likely getting spooked. The security could get find additional tailwinds, should some of the weaker bearish hands capitulate to the equity's bitcoin boom.

Overstock.com could be due for a round of bullish brokerage initiates, too. Just one analyst currently follows the stock, though they maintain a "strong buy" rating.

 

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