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TheStreet Open House

Pitney Bowes Won't Die Quietly

According to Nasdaq, if the shorts want to cover, it would take three weeks of current trading volume for them to close out their short positions. It doesn't take a Jim Cramer to figure out short interest this high can become explosive after a strong earnings report. Even a widely subscribed positive press release can send shares soaring.

Two recent short squeeze examples include Tesla Motors (TSLA) and First Solar (FSLR). Both companies traded at price multiples above Pitney Bowes and were targets of short-sellers. Both companies surprised Wall Street with positive news.

First Solar doubled in less than two months when shares climbed from under $28 to an intra-day $59 peak. Tesla Motors accelerated from $40.50 on April 9, 2013 to over $100 today. Short interest is rocket fuel for a stock that delivers unexpected terrific news. Short-sellers are considered the smart money on Wall Street for a good reason -- they usually get it right.

Pitney proved short-sellers who failed to take gains in December were wrong. If the company demonstrates to the entire market the shares are undervalued, a short squeeze above $20 is the likely next stop. The next significant resistance testing level is the 200-week moving average near $19.50.

With almost 40% of shares shorted, there is certainly enough fuel to get there if the company can light the fuse.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Robert Weinstein currently blogs, mentors traders, and writes several weekly columns in Rocco Pendola's Option Investing newsletter from his home in northern Wisconsin. Robert tends to focus on the psychological importance of goals, risk mitigation, emotion, and relatively short term market exposure. With nearly 30 years of studying and investing experience, Robert has experienced the many ups and downs in the financial markets and uses the knowledge gained to maintain balance. Robert believes the best way to make money investing is to avoid losing it. The best way to avoid losing is to know what emotional traps lay in the path of investors and learning how to avoid them. Robert is a voracious reader of financial related books often completing more than one book a week while not trading or writing. Robert contributes to his blog at paid2trade.com on a regular basis with an emphasis on studying behavior finance.


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