Bears Betting on Bank of the Ozarks

Bank of the Ozarks(OZRK Quote), a Southeastern U.S. regional bank, peaked in late 2006 at $35 a share and has since formed a technical downtrend channel. This makes the stock a candidate for a potential short trade.

Downtrend channels typically form when price behavior is not attracting new money as price rises. While there are plenty of traders and investors willing to buy on weakness, it is the ability of price to test resistance and break higher with volume that finally negates a downtrend channel.

As you can see on the chart of Bank of the Ozarks below, each attempt at a breakout is met with heavy distribution pressure. The price of the stock reverts back to the support of the downtrend channel. ...