Disappointing Decrease In Athabasca Oil’s Short Positions

I called on Seeking Alpha that the recent rally in the stock price of Athabasca Oil would help clear the massive short positions.

ATH StockCharts.com October 20

Source: StockCharts.com

ATH StockCharts.com October 22

Source: StockCharts.com

Unfortunately, the shares sold short decreased by only 350,000 as we saw from the Top TSX Short Positions published today. I thought that the push over the 50-day moving average of the stock price would mean a greater decrease in the amount of shares sold short after a double bottom. The stock was put back to its place by the 200-day moving average but should be fine in the short-term, as long as it can hold over the 50-day moving average.

As such, I now believe the only thing that will lead to shorts covering their bets will be a sustaining rise in the price of oil. Therefore, patience is warranted. The stock will most likely test its 50-day moving average.

Disclosure: I am long ATH.