Shares in Ocado [LON:OCDO] are down 19.4% since its last filing but hedge fund managers still think this short trade has more to give, and so do we. Ocado's stock is now priced below its 5-day, 50-day, and 200-day moving average, while its MACD (Moving Average Convergence Divergence) indicates that the stock's price movement momentum is weakening. Historically, this is a negative setup in the near, medium, and long-term.
Ocado is admittedly operating in a tough market right now. Many hedge funds have been starting to build short positions on Ocado as we went into 2023 and it is quickly becoming one of the most shorted stocks in the London market. Even in the last week we have seen funds like Varenne Capital Partners and Whale Rock Capital Management adding short positions. BlackRock is also maintaining a short position as of 1 March.
Ocado's share price had been relatively range bound after it spiked to 925p in November. However, that story seems to have changed recently. Traders of the stock had been looking at a range of between 616p and 808p since the price of Ocado shares stabilised mid-November.
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