Microchip Technology (MCHP) reports earnings today after the close, and market signals suggest caution. The stock is already down 6.54% in the past week, an unusually sharp decline leading into earnings. At the same time, short interest has increased significantly, reinforcing a bearish outlook.

There has been significant movement in the stock and short positions over the past week, which could provide insight into what happens next.

The stock is down 6.54%, a notable drop for both a typical week and an earnings week. Historical patterns suggest this is bearish after earnings.

Short interest has risen substantially, further signaling bearish sentiment for the stock.

The stock price and short interest appear correlated, with investors shorting the stock on the way up and covering on the way down in a reversal strategy prior to earnings.

While the two models don't fully align, the overall expected return is largely negative

The short position is at a much higher level, and the stock has dropped significantly.

MCHP has faced a string of negative news recently, driving up short interest.

MCHP’s stock has already taken a notable hit ahead of earnings, and short sellers are doubling down. While short interest trends and stock price movement don’t fully align, the overall sentiment leans bearish heading into the report.

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