MSTR Short Interest Falls 4.53% But Technical Analysis Reveals Mixed Signals: Is Michael Saylor's Strategy Poised For A Bounce Back?

While the short interest on the outstanding shares of Michael Saylor‘s Strategy Inc. MSTR fell during its latest reporting period, implying a positive investor confidence, a mixed set of technical indicators highlighted the stock’s vulnerable position.

MSTR Short Interest Falls

The short interest on Strategy’s stock (formerly MicroStrategy) decreased during the last reporting period, falling from 24.01 million to 22.92 million shares. About 9.54% of the company’s publicly available shares were shorted as of the settlement date on Feb. 14, having an effective date of Feb. 26.

According to Nasdaq data, the short interest decreased by 4.53% from the previous settlement date of Jan. 31.

The average daily trading volume during the latest period increased from 18.10 million to 12.45 million shares. The volume indicated that it would require approximately 1.84 days for the short sellers to cover their positions without significantly impacting the stock price.

While high short interest signals bearishness; a decline indicates rising confidence. Hence, the 4.53% decline was a positive indicator.

Technical Analysis

Despite a reduction in the number of shorts, the technical indicators painted a mixed picture for the stock. As the stock closed at $308.55 apiece on Wednesday, it was clearly in a long-term uptrend, as it’s above its 200-day moving average of $234.93. Additionally, the stock showed short term bullishness by being above its eight- and 20-day moving averages.

However, it was below its 50-day moving average of $327.32 which indicated a potential intermediate-term weakness, according to Benzinga Pro.

The relative strength index of 50.95 was in the neutral zone. But a negative MACD of -15.84 suggested a bearish momentum.

Thus, while long term trends are positive, recent momentum is negative.

Price Action: On Wednesday, Bitcoin BTC/USD treasury company, MSTR rose 12.14% outpacing the gains in the exchange-traded fund tracking the Nasdaq 100 index, Invesco QQQ Trust, Series 1 QQQ, which rose 1.30%. In premarket on Thursday, MSTR was down 1.22%, whereas QQQ declined 1.25%.

The stock remains 2.85% higher on a year-to-date basis, however, it’s up 147.59% over a year.

Benzinga tracks 14 analysts with an average price target of $494.93 for the stock, reflecting a “buy” rating. Estimates range widely from $140 to $690. Recent ratings from Barclays, Keefe, Bruyette & Woods, and Maxim Group average at $493.67, suggesting a potential 61.290% upside.