Skepticism Builds On Rallying Pinnacle Entertainment, Inc. (PNK)

Despite the broader equity market's struggle for gains, Pinnacle Entertainment, Inc (NYSE:PNK) is sitting comfortably in the green today. At last check, the stock was up 6% at $39.70, and fresh off a record high of $40.70.

Boosting the shares are reports that Gaming and Leisure Properties Inc (NASDAQ:GLPI) raised its hostile bid for PNK's real estate assets to $5 billion from $4.1 billion. Pinnacle has neither accepted nor rejected the offer, and is waiting for a board review.

Heading into today's session, the stock was already boasting a more than 68% year-to-date lead. More recently, though, PNK has been lingering in the $37-to-$38 range.

Despite the equity's longer-term technical tenacity, most analysts have remained on the sidelines. Specifically, 10 brokerage firms currently cover the shares, with two maintaining a "strong buy" recommendation, versus six "holds" and two "sells." Meanwhile, the consensus 12-month price target stands at $33.75 -- a discount to current trading levels.

Elsewhere, short sellers have been jumping ship. Short interest declined 12% in the last two reporting periods, and these bearish bets now account for 5.7% of the security's available float. However, it would take more than a week to cover PNK's remaining shorted shares -- at average daily trading levels -- meaning there's still some sideline cash available to help fuel today's rally.

Option traders, however, are not convinced the equity can sustain a move above the round-number $40 mark. In fact, put volume has soared to 11 times the average intraday pace this afternoon, with the majority of the volume centered at PNK's July 40 strike. It seems safe to assume new positions are being purchased here, as speculators bet on Pinnacle Entertainment, Inc (NYSE:PNK) running out of steam by next Friday's close, when the front-month series expires.