On no news, shares of online DVD-rental operation Netflix
The stock market has been weak over the same period, so why the ascent?
First, a strange rumor was floated that Wal-Mart
Just the same, the crazy rumor may have helped the stock start to move, but the ultimate rocket fuel pushing it upward is probably short covering -- a bona fide "short squeeze." As of August 8, nearly 8.3 million shares of Netflix were sold short (meaning borrowed from a broker and sold in hopes of a price decline). This means that 50% of the company's available shares were sold by short sellers and need to be repurchased, creating eventual buying pressure.
As of July, the short interest on Netflix was even higher, so already some buying from capitulating short sellers has helped the stock move upward. Plenty of potential buying pressure remains. The amount of short interest on the stock equates to 12.12 days of Netflix's average daily trading volume -- high enough to place it seventh on the market's list of most heavily shorted stocks as a ratio to average daily volume.
This means that should good news arrive, or if momentum keeps pressing the stock to new highs, many more short sellers might start closing their positions and the stock could see many more days of higher-than-average volume and buying pressure.
Both Netflix and TiVo are strong-performing David Gardner picks in Motley Fool Stock Advisor .
Jeff Fischer has a stake in Netflix.