The shares of Overstock.com Inc (NASDAQ:OSTK) are pointed 4.2% higher in pre-market trading, amid reports that Kroger Co (NYSE:KR) could be interested in buying the e-commerce concern. However, even without the M&A speculation, OSTK shares -- which have moved in step with blockchain stocks recently -- could be sending up a "buy" signal, if past is prologue.
The shares recently pulled back to within one standard deviation of their 40-day moving average, after a lengthy stretch above this trendline, per Schaeffer's Senior Quantitative Analyst Rocky White. After the past seven pullbacks to that moving average, Overstock shares were higher one month later 71% of the time, averaging a huge gain of 11.13%.
OSTK closed at $71.25 on Thursday, and has dropped more than 20% since touching a record high of $89.80 on Jan. 8. Still, the equity has more than quadrupled in the past six months alone, and there's plenty of room on the bullish bandwagon.
Just one analyst follows Overstock, leaving the door wide open for positive initiations to lure more buyers to the table. Meanwhile, short interest represents a whopping 70% of the equity's total available float, and the stock's Schaeffer's put/call open interest ratio (SOIR) is in the 90th percentile of its annual range, pointing to a much bigger-than-usual put bias among near-term traders. An unwinding of skepticism on Wall Street could add fuel to red-hot OSTK's fire.