Your chart shows shorting virtually unchanged over the last 7 months, yet the price has been all over the place from almost 12 to under 4. Doesn't that show that price is much more dependent on things other than shorting?
I would agree that any dilution of the float changes the dynamic, but over the last 7 months it appears to not have changed much while the price has -- blowing your theory to bits.
Re volume trading - who cares? I sure don't. Volume isn't price.
My philosophy is to just be honest and balanced, and let the market decide if it agrees or not.