$ONON: 60% Short Volume, a $1.7M Block, and a Squeeze Score of 7

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Someone is leaning hard on $ONON, and someone else is quietly taking the other side. The only question is which of them is early.

Sixty percent of the stock's off-exchange volume printed as short sales, against a normal 44%. The squeeze score for the same stock reads 7 of 100. I think both numbers are telling the truth, and the distance between them is what this letter is about.

A Crowd That Grew Into Strength

$ONON sits at $32.11, down 3.2% on the session, with 32.9M shares short. Short interest is up 66.1% since the last report, and days to cover is 3.1.

The stock has moved +7.0% over the last twenty sessions. My read: the shorts did not wait for weakness. They added into a rising stock, and so far that crowd has been losing, not winning.

Today's volume reads 0.0x normal, which tells me nothing about conviction in either direction, so I am not leaning on the red candle. The short-volume reading matters more. The ratio of 60% against a normal 44% says the pressing is active right now, and the shorts-pressing score of 49 of 100 agrees.

Why a Score of 7 Doesn't Settle It

The squeeze risk reads 7 of 100, and for a long the sheet calls short positioning ordinary. I take that at face value: this is not a squeeze today.

What I make of it is that the score measures how stretched the fuel is, not whether anyone has struck a match. Fuel that grew 66.1% in one reporting period is a different thing from fuel that has sat still. Speculation: if the shorts keep pressing and the price refuses to give ground, 'ordinary' becomes a stale description quickly.

The bull case

• Short interest up 66.1% into a stock that is up 7.0% over twenty sessions
• $1.7M block at $31.50 bought on an uptick
• $32.00 put wall with dealers buying into it
• Room to $36.08 before the 20-day high caps it

The bear case

• Double Top and bearish marubozu on the daily
• Price 3.9% under its 20-day average
• Squeeze risk only 7 of 100
• Volume running 0.6x the prior twenty sessions

The Print Under the Price

The largest off-exchange print was 53,111 shares at $31.50, about $1.7M, on an uptick. That is twice yesterday's biggest block. A print that size is one order crossed away from the public book, not a crowd of small trades.

The options board sits right beside it. The put wall is at $32.00, a level where dealers buy into weakness, and the stock is trading just above it. Dealers are short gamma, the gamma flip is near $27.00, and the call wall is at $38.00. Hedge pressure is 0% of an average day's volume, so the options are not pushing the stock today.

My read: shorts are pressing into a floor made of one patient buyer and a dealer wall. One block is not a trend, and I won't pretend it is. It does explain why the book looks held while the short ratio climbs.

What the Chart Says Against Me

The daily chart shows a Double Top, a bearish marubozu and a spinning top inside an uptrend. Price is 3.9% below its 20-day average of $33.43. The stock is 17.8% below its 60-session high of $39.05 from Aug 10, and volume over the last five sessions ran 0.6x the prior twenty.

It has closed higher in only 4 of its last 9 sessions, and the largest move of the last twenty was -4.4% on Oct 23. A short seller reading that tape has a real case, and the shorts may simply be right.

The market backdrop is Neutral with a bias of +1, and insiders are quiet. Nothing outside the stock is carrying it, so the stock has to do the work itself.

Kill switch

Any one of these and the thesis is over, no averaging down, no renaming it.

• A close under $28.90
• Short volume drying up while price stays under $33.43
• No second day of 60%-plus short volume with price holding
• A rally to $36.08 on volume that never expands

The Sequence I Need to See

I want three things in order. First, a reclaim of the $33.43 average. Second, a second day of 60%-plus short volume with price refusing to fall, which is shorts pressing into strength. Third, volume that finally expands on a close above the recent range.

The destination is $36.08, the 20-day high, where the covering runs out of sellers to meet. That is +12.4% from $32.11, and I am thinking in days. This is speculation and it depends on that sequence arriving.

The call. If $ONON reclaims its 20-day average of $33.43 and a second day of 60%-plus short volume fails to push it lower, I think $36.08 becomes the target over days. Under $28.90, I'm wrong; that is below the 20-day low of $29.16, and it would mean the shorts' read of the tape was the right one.

Fuel Without a Match

The crowd is heavy, the buyer under the price is real, and the squeeze score is still honest at 7. I am leaning bullish because the pressing is happening on top of a floor, not because the squeeze has arrived. If the match never comes, the shorts get paid and I step aside at $28.90.

Desk record. 8 of 35 scenario targets traded before their invalidation (23%), 21 stopped out, 6 ran out of time, average outcome +2.09% per piece. Past pieces say nothing about this one.

The desk's scenario leans bullish. Bull or bear, the kill switch above is what keeps either view honest.

Sources and further reading: SEC EDGAR filings for ONON · FINRA daily short sale volume files · Nasdaq short interest: ONON · Cboe options quotes: ONON · On Holding AG investor site · ONON quote, chart and data on StockMarketLoop.

Data as of Oct 27, 9:00 AM ET: options positioning, FINRA short volume, the off-exchange trade record, the structure map, SEC filings and the ticker's headlines. Vaughn McNair (Grandmaster-Obi) and Making Easy Money may hold or trade positions in the names discussed. This is speculation and education, not financial advice.