Overstock is losing money faster than this time last year, and worse than most estimates. According to Zacks.com: Overstock.com came out with a quarterly loss of $2.20 per share versus the Zacks Consensus Estimate of a loss of $0.82. This compares to loss of $0.29 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -168.29%. A quarter ago, it was expected that this online discount retailer would post a loss of $0.87 per share when it actually produced a loss of $1.74, delivering a surprise of -100%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. (Zacks.com) Earnings was tepid, but Overstock.com also announced that GSR Capital will invest $270 million in Overstock's subsidiary tZero. This means OSTK's investment in tZero will be diluted. According to benzinga, "The agreement to sell the 18-percent stake to GSR Capital would diminish Overstock's stake from 81 percent to 63 percent." (Benzinga.com).The market's reaction was mixed. I think tZero is still a very risky blockchain play, but Patrick Byrne is passionate about it. OSTK Daily Chart (click to enlarge) Bulls Reigned In after Breakout:- After a crypto-driven hype cycle in the end of 2017, OSTK entered correction mode in 2018. - The bearish correction stalled when price consolidated mostly above $30. - We can see that there wsa a false bearish breakout, which was followed by a bullish breakout.- Then, after a pullback, price held above $36, which was a strong sign that the market could be turning bullish.- Also note that the RSI tagged 70 and then held above 40, which was a sign that bullish momentum was developing. - Then, a more clear breakout followed the Earnings report and tZero Investment news. - The breakout tagged the 200-day simple moving average (SMA), and immediately pulled back again.- I think we will see support in the $40-$42 area, which is exactly where the pullback is attacking.Weekly Chart Adds Confidence:- On the daily chart, note that the RSI held above 40 during the 2018 correction.- This suggests even on a long-term horizon, there is bullish momentum building. - So we have bullish momentum, and now a bullish breakout and pullback.- I think the market will be looking at OSTK as a candidate to buy-on-a-dip, the current dip. Is Timing Bad?- The thing is, the crypto market is bleeding out, so the market might not be so confident about the tZero investment. - Some bottoming of bitcoin might provide some support for OSTK as well.- But despite the correlation, we can respect the merit of price action, which has turned a false bearish breakout into a bullish one. - If price indeed holds above $40, we should anticipate a push back to the $50 area if not higher. OSTK Weekly Chart (click to enlarge)