Lumber Liquidators Attempting To Rebound

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

Lumber Liquidators Holdings IncLL shares are trading higher by $3.30 at $31.25 in Tuesday's session. A possible catalyst for the rally may be an amended 13G Filing from BlackRock on Lumber Liquidators that shows an increased stake from about 4 percent as of December 31, 2014 to 10.1 percent.

What this indicates is that the firm is more than doubling down on its losing positions that underwent an unprecedented decline from its February 25 high ($69.99) to Monday's low ($27.79).

Another catalyst for the rally may be some short covering as the short interest ratio has approached 30 percent of shares outstanding. Aggressive intraday traders playing the long side off the opening print may be adding to their winning positions and forcing the shorts to cover at higher prices than intended.

At this time, the rally has reached $31.94. This level is just of Friday's low ($32.34). On some occasions, former support levels may act as new resistance levels as previous buyers are attempting to exit losing positions.