OSTK just ran into a historically bullish trendline
Overstock.com Inc (NASDAQ:OSTK) stock is up 3% to trade at $83.11 at last check, looking to bounce off the $79 level following a 20.4% drop over the last month. After this negative price action, now could be a good time to buy the dip on OSTK, as the stock's Relative Strength Index (RSI) of 19 is in "oversold" territory. This means a short-term bounce is likely in the cards. Year-to-date, the security is still outperforming with a 73.5% gain.
Plus, OSTK has just pulled back to its 200-day moving average, after spending a significant period of time above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, four similar signals have occurred during the past three years. The equity enjoyed a positive one-month return in 50% of those cases, averaging a 6.4% gain. From its current perch, a similar move would put the security back above the $88 level.
There is plenty of room for a short squeeze, too. Short interest represents 10.9% of Overstock.com stock's available float, or four days' worth of pent-up buying power.
