Disclosure & Risk Disclaimer
I currently hold a position in UPST and therefore have a financial interest in the stock discussed. This creates a potential conflict of interest, as the I may benefit from changes in the stock’s price. This is an extremely high risk stock! READ FULL DISCLAIMER AT THE END OF THIS ARTICLE BEFORE MAKING ANY INVESTMENT DECISION!
UPST was my top pick in 2024, first identified near $26 and successfully exited between $67 and $82 within approximately six months. Following a complete cycle reset and renewed accumulation, UPST is once again setting up as a top pick, with 2026 shaping up as a potentially pivotal big year.
UPST’s Post-Thanksgiving Rally Signals Bullish Potential:
Price Action Since November 25: Steady Climb on Strong Volume
Upstart Holdings (UPST) has been on a strong and methodical rally since late November, and the character of the move is important. The stock closed at $41.77 on November 25th after a sharp 7% gain on above-average volume, marking a clear inflection point following weeks of consolidation. That move was immediately confirmed in the thin post-Thanksgiving session on November 28, when UPST surged another nearly 7%, pushing shares toward $45
Rather than fading, the stock digested those gains constructively. Early December saw a brief and controlled pullback, but selling pressure was shallow and short-lived. Buyers stepped back in aggressively starting December 3rd, driving a multi-day advance that carried UPST into the upper $40s. By mid-December, the stock was trading just below $50, representing an approximate 18% gain from the November 25th pivot low.
Importantly, this rally has been supported by consistently strong volume. Several of the largest up days since late November have occurred on trading volume well above the recent average, signaling institutional participation rather than retail speculation. The stock has now established a clear pattern of higher highs and higher lows, a classic hallmark of an emerging uptrend.
UPST is also pressing directly into a technically important resistance zone between $50 and $53. This area acted as a key support and resistance band earlier in the year and coincides with long-term moving averages. The market is now watching closely to see whether price can decisively clear this level. A breakout through this zone would likely trigger trend-following buying and confirm a broader reversal.
Options Market Shows Unusually Bullish Activity (“Smart Money” Bets)
The most compelling confirmation of this bullish setup is coming from the options market. Since late November, UPST options activity has been aggressively skewed toward calls, with multiple signs of institutional or “smart money” positioning.
Call volume has surged well above normal levels on multiple sessions. In several instances, daily call volume has equaled or exceeded half of UPST’s average daily share volume when adjusted for share equivalency. The majority of this activity has been concentrated in near-dated out-of-the-money calls, particularly at the $50 strike, suggesting traders are positioning for an imminent upside move rather than a slow grind higher.
Put activity, by contrast, has been notably muted. The put-to-call volume ratio has frequently registered between 0.1 and 0.2, an extremely low level that reflects overwhelming bullish sentiment. This is not a one-day anomaly — the call-heavy imbalance has persisted across multiple weeks, reinforcing the idea that traders are consistently betting on upside continuation.
Of particular importance are several large call sweeps that have appeared on the tape. In early December, a single aggressive buyer swept thousands of December $50 calls across multiple exchanges, lifting offers rather than waiting passively. These types of trades are typically associated with institutional players expressing high conviction. When large capital commits to short-dated upside exposure at out-of-the-money strikes, it often signals expectations of a sharp directional move.
Taken together, the options market is clearly telegraphing bullish expectations. Elevated call volume, persistently low put-to-call ratios, and repeated large call sweeps strongly suggest informed participants are positioning for a breakout.
Trading Pattern and Technical Setup: Breakout on the Horizon?
The most important technical level to watch remains the $52 to $53 zone. A decisive close above this area would represent a clean breakout from the post-earnings consolidation range and could open the door to a rapid expansion higher. Given the volume profile and options positioning, such a breakout could occur quickly once resistance gives way
High Short Interest: Fuel for a Potential Short Squeeze
Another critical component of this bullish setup is UPST’s extremely high short interest. Nearly 30% of the stock’s float is currently sold short, placing it among the most heavily shorted stocks in the market.
This level of short interest creates a powerful asymmetric dynamic. As the stock rises, short sellers are increasingly pressured to cover, adding incremental buying demand. The recent rally has already forced some shorts to reduce exposure, but the majority of short positions remain outstanding.
With days-to-cover estimates exceeding four trading days, any sustained upside move — particularly one driven by a technical breakout — could accelerate rapidly as short sellers rush to exit. This creates the potential for a feedback loop where rising prices force additional covering, which in turn drives prices even higher.
In many historical cases, stocks with improving fundamentals, strong technical momentum, and high short interest have produced sharp, outsized rallies once resistance levels are breached. UPST fits that profile unusually well.
Improving Fundamentals and Market Conditions Support the Bull Case
Beyond technicals and positioning, UPST’s fundamentals have materially improved. The company’s most recent earnings report showed strong revenue growth, a meaningful improvement in profitability, and expanding margins. This performance marked a clear inflection point after several difficult quarters and reinforced confidence in Upstart’s AI-driven lending platform.
Management guidance has also improved, and new lending partnerships continue to validate the company’s business model. As more financial institutions adopt Upstart’s technology, revenue visibility improves and long-term growth prospects strengthen.
Macro conditions may also become more favorable. With inflation moderating and expectations building for eventual interest rate cuts, the environment for fintech and consumer lending could improve significantly over the coming quarters. Lower rates would likely stimulate loan demand and reduce credit stress, both of which benefit Upstart directly.
Why UPST May Be Setting Up for an Explosive Move Higher
Several powerful factors are converging:
- Strong post-November price momentum supported by above-average volume
- Aggressively bullish options activity, including large call sweeps and extremely low put-to-call ratios
- Clear signs of institutional positioning for upside
- Exceptionally high short interest that creates squeeze potential
- Improving company fundamentals and expanding partnerships
- A macro backdrop that may soon favor growth and fintech stocks
Individually, each of these factors is constructive. Combined, they create a compelling case that UPST may be nearing a significant upside resolution.
Bottom Line, TL:DR
UPST is exhibiting the exact characteristics often seen ahead of major upside moves: tightening price action near resistance, heavy bullish options positioning, rising institutional participation, and a large pool of vulnerable short sellers. If the stock can break decisively above the $52–$53 resistance zone, the resulting move could be swift and powerful.
While volatility should be expected, the balance of evidence suggests the path of least resistance is now higher. UPST appears to be transitioning from recovery mode into a potential momentum-driven expansion phase — and the market is beginning to position accordingly.
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