Took these screenshots earlier today BABA and TWTR went through a similar process after IPO. It consolidated downward but fails to break down and soon the short sellers and bulls waiting for lower prices have to chase to get on and the short sellers get squeezed out.THe psychology is also interesting. Conviction in the short run can be a weakness, and in a long run it may break and you may not be able to have it. The short sellers say "but I'm right" and add on or are forced out only to try again higher. Collectively it is the short sellers conviction that creats more selling than can be sustained in the short term and lower prices than can be sustained in the short term that allows for prices to be driven higher. And it is the short covering rally that creates buying that pushes stocks higher and forces shorts collectively to buy higher.
There are people underneath signalling to be patient and wait for lower prices to buy. That creates a potential bid should prices go lower and also a potential chase effect should they run out of patience if/when prices begin going green and shooting higher.
Pay attention to price action. If it breaks down and doesn't respond by reversing then perhaps the trade is over, but if it begins going higher and you see green shoots appearing, then beware a short squeeze ahead. Have a stop and manage risk, but remember that if more people short and more people sell that's more ammo for a greater short squeeze should it occur. Of course it may not so you have to be flexible, but what I see is a lot of conviction from bears and they have no other move left but to post on twitter and stocktwits about how obviously over priced it is and how the longs are "bagholders". IN order to be a bagholder you actually have to be willing to hold the bag as opposed to having a tight stop. But every stock in the late 90s was overpriced that doubled in price and so was TWTR when it went from $38 to $70. NFLX had nothing proprietary about it and Amazon has chronically been overpriced while it rallied from $50 to $850.
Again, I may be wrong, and it's also possible I'm right and the bears will eventually be right after it goes much higher. But to me this represents opportunity if you can manage the downside and keep a modest position size or modest risk overall.
If the idea begins to gain traction I may add to it, but be warned... the best performing stocks don't offer too many dips when they start moving while everyone waits on the sidelines wishing they were in as the green shoots push the stock higher.
edit:Using a time machine I was able to look at the intraday patterns
