$SanDisk Corp.(SNDK)$ Bearish chart on a bullish stock. What usually happens in that setup? Bears load up on puts or go short until the bulls pile in and run them over.
SanDisk's buyback program allows the company to repurchase as many as 10 million shares under a $15.5 billion program if the price holds around these levels. After accounting for institutional ownership, professional investors, and retail holders, there are less than 200 thousand shares actually available for SanDisk to buy back. Institutions do short their own positions in a weak market, so SanDisk ends up buying those shares and retiring them as well. At some point that creates a squeeze. Regardless of what the chart indicators say or how bearish the setup looks, the squeeze is driven by passive buyers in 401k flows and the quarterly buyback program.
As the price climbs, institutions close out their hedges. With a stock like SanDisk, this kind of move can happen in hours rather than days. It only takes one hedge fund deciding to build a new 1% position to pop the price.
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