OmniVision Technologies plunges on soft 3Q revenue outlook

However, looking ahead, OmniVision predicted third-quarter revenue of $145 million to $160 million. By contrast, analysts are looking for revenue of $168.6 million for the current quarter. Adjusted earnings are expected to arrive between 14 cents and 24 cents per share, encompassing Wall Street's average forecast for 20 cents per share.

So, despite the upbeat second-quarter results, OVTI slumped into negative territory Tuesday, with the stock down nearly 13% at its intraday nadir. The stock breached support from its 10-week and 20-week moving averages back in late October, and these two trendlines have since switched roles to act as staunch resistance. Meanwhile, the $12 level appears to be acting as support; this region is home to OVTI's rising 10-month moving average.

Short sellers are likely cheering OVTI's negative post-earnings reaction, as these bearish bettors have ramped up their exposure to the stock significantly in recent weeks. The number of shares sold short surged by 44.4% during the past month, and short interest now accounts for a lofty 8.8% of the stock's float.

Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.