3 Big Short Interest Names with Bullish Setups

Last week, several high short-interest, momentum-driven stocks broke out strongly, riding the wave of speculation as the broader market hit fresh highs. While this level of euphoria inevitably raises questions about sustainability, history shows that momentum can carry much further than skeptics expect.

As Warren Buffett famously said, the market can remain irrational longer than investors can stay solvent.

The widespread Fear & Greed Index sits at 62, reflecting greed but not yet extreme greed. Similarly, the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) holds an RSI of 71, stretched but not yet at an extreme. In other words, momentum could still have room to run. With that backdrop, three heavily shorted stocks stand out with technical setups that could fuel further upside if sentiment stays supportive.

HIMS: A Retail Favorite on the Edge of a Breakout

This year, Hims & Hers Health (NYSE: HIMS) has been a lightning rod of attention, drawing scrutiny from Washington regulators over advertising practices and the telehealth distribution of GLP-1 weight loss drugs. Just last week, the FDA posted over 100 letters to companies, including Hims & Hers, as part of a broader crackdown on pharmaceutical corporations.

Despite these potential headwinds, the stock’s performance has been nothing short of extraordinary. Shares are up 139% year-to-date and 259% over the past twelve months.

Technically, HIMS has been consolidating since May in a broad range between $40 support and $65 resistance. On Friday, the stock pushed toward the $60 level, suggesting a potential retest of that upper boundary.

What makes the setup especially compelling is the 38% short interest, equivalent to more than 74 million shares sold short. If the stock can break through the $65 barrier, the sheer size of the short position could ignite a powerful squeeze, adding fuel to its already strong momentum.

DLO: Strong Earnings Meet Heavy Shorts

DLocal Limited (NASDAQ: DLO), a fintech player specializing in cross-border payments in emerging markets, has been a quiet name for much of its history. That changed after its latest earnings release, where it delivered a convincing beat on both revenue and earnings.

The strong results helped DLO break out of a long base, with shares now up nearly 40% year-to-date. Wall Street has taken notice, lifting the consensus price target from $12.45 three months ago to $14, alongside multiple upgrades.

But the technical picture is only part of the story. DLO carries a significant 23.4% short interest, equal to nearly 15 million shares. The stock currently trades just above $15, and if it can hold that level while pushing through earnings-gap resistance near $16, it could trigger momentum and even open the door to price discovery.

TEM: A High-Short AI Healthcare Play

Tempus AI (NASDAQ: TEM) has quietly been one of the most impressive performers of 2025. Shares are up more than 160% year-to-date, driven by the company’s role in applying artificial intelligence and machine learning to precision medicine.

Its core strength lies in oncology, where Tempus provides genomic profiling, digital pathology, and data-driven insights to support personalized cancer care.

The stock is now approaching a key inflection point. TEM has been consolidating beneath its all-time high near $91, forming a clean technical level to watch. What makes the setup even more compelling is the 25% short interest, positioning the stock for a potential breakout should it decisively clear resistance.

With the AI healthcare narrative still in its early innings and shorts leaning heavily against the stock, TEM could be setting up for another powerful leg higher.

Momentum Remains Firmly Intact

The broader market may be stretched, but momentum remains firmly intact, and high short-interest names are often the biggest beneficiaries in such environments. HIMS, DLO, and TEM all combine strong technical setups with elevated short interest, giving them the potential to squeeze higher if bullish momentum continues.

While speculation inevitably cools at some point, for now, the backdrop remains supportive. For investors watching the tape, these three names stand out as some of the most intriguing bullish setups in today’s market.

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The article "3 Big Short Interest Names with Bullish Setups" first appeared on MarketBeat.