Earlier I noted some news on Focus Media Holding Ltd (FMCN) and this spurred me to look into the stock. What I found was that there are two dramatically opposing viewpoints on the stock. To see what I mean, check out these two graphs.

On the left-hand side we have analyst ratings and on the right we have the graph for total short interest. According to Zacks, all of the analysts who follow the stock give it a "buy" rating. This optimism, however, doesn't seem to be shared by short sellers. Total short interest has been rising and data collected by our Quantified Analysis group shows that 23% of the stock's float is now sold short.

In other words, we have a heavily-shorted stock that is somewhat of a Wall Street darling. I find these sort of situations interesting as it seems that "something" has to eventually give. If the short sellers are proven correct, you would expect that analysts would eventually throw in the towel and downgrade the stock. On the flip side, if the analysts are correct in their outlook, we have the potential for a short-covering rally.

A look to the weekly chart shows that short sellers appear to have been the smarter money so far. The stock is up more than 10% after the earnings report but the chart below shows an intermediate-term downtrend is still in place. Given the longer-term trend, I think that downgrades are a possible concern here as some on the Street may be looking to "sell into" the strength.

Chart Courtesy of Thomson Financial