Are Tilray Shorts About To Get Wrecked?

Institutions have increased their short position on Tilray Inc TLRY by over 12 million in the last month alone and it looks as though they’re about to regret it.

Of Tilray’s 426.82 million float, 34.81 million shares are held short as of May 14 versus the only 22.25 that were held short as of April 14.

News on Tuesday that Amazon Inc AMZN supports federal legalization of marijuana and will stop drug testing some employees in certain positions has helped to renew interest in the cannabis sector and Tilray shorts could get squeezed.

See Also: How to Buy Tilray Stock

The Tilray Chart: Tilray was trading up over 11% at one point in Thursday’s premarket but dropped to just 3% above Wednesday’s close in sympathy with AMC Entertainment Holdings Inc AMC when it announced it had entered into an equity distribution contract.

Tilray’s most recent ascent began on May 25 when it broke up bullish from a triangle and on Wednesday continuing bullish momentum helped the stock break through resistance at $17.57. Tilray’s action on Wednesday also printed a bullish engulfing candlestick indicating that higher prices will come during Thursday’s trading session.

Tilray’s stock is trading above both the eight-day and 21-day exponential moving averages (EMAs) and on Wednesday the eight-day EMA crossed above the 21-day EMA, which puts the stock in a very bullish position. Tilray is also trading above the 200-day simple moving average, indicating that overall sentiment in the cannabis company’s stock is bullish.

Bulls want to see the premarket strength hold throughout the day and for Tilray to pop up above resistance near the $20 level. If Tilray can gain that level as support, it has room to move up toward $23.63 before meeting another resistance level and potential stalling.

Bears want to see bearish volume come in and push Tilray down below support of the $17 area and the eight-day and 21-day EMAs. If Tilray was to lose the levels as support, it could revisit the $15.17 mark.

TLRY Price Action: Tilray was trading up 9.5% to $20.90 at publication time.