A gap to the downside stopped the Groupon (GRPN) rally in its tracks today.
In the daily bar chart of Groupon, above, we can see what 77 to 79 million sold-short shares of Groupon can do, according to www.shortsqueeze.com. It can generate a fierce rally like the kind we saw in the past three weeks.
There is some heavy volume during the breakaway gap in February, but notice the lackluster response of the On-Balance-Volume (OBV) line: it hardly moves up. Prices did get over the 50-day moving average and the 200-day average, but only the slope of the 50-day turned positive.
The longer-term chart of Groupon, above, shows the price history since the IPO. It doesn't take long to notice that this stock ran into problems in the first year of trading. There were two recovery rallies from the late 2012 low, but the slope of the 40-week moving average is still down.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line most of the time and the OBV line looks bearish, except for a short-term uptick.
Barring some fresh bullish influence, Groupon is likely to drift back down to the $2 area in the weeks and months ahead.