Foundering retailer J.C. Penney might be poised for better sales quarters ahead, retail analyst Dana Telsey said Tuesday.
"Their balance sheet right now, they're holding on," she said. "Certainaly seems like there's a lot of change happening, and it's not working that great yet, but at least the wheels are in motion."
On CNBC's "Fast Money," Telsey said that J.C. Penney might have nowhere to go but up.
"You have seen a bottoming in general, I think," she said. "Look at Penney's, where the comps were less worse. We're hearing a lot of people and companies talk about August picking up."
Specifically, JCP was tapering its bad news.
"Comps are less negative," Telsey said. "They were down 11.9 percent when they've been down in the 20s and in the 30s. So, the fact that the comps are less negative, the traffic declines are less negative, that's what you've seen."
Stuart Frankel's Steve Grasso said that he wasn't jumping into the J.C. Penney trade.
(Read more: Trading the 'summer doldrums pullback')
"I'm afraid of J.C. Penney still," he said. "I think that there's huge squeeze opportunities here, and that's what you're seeing. So, whenever there's slightly less bad news or slightly bullish news, the stock can rise very quickly. So, it's not for the faint of heart. I'm afraid of shorting it."
A pop in the stock could hurt short-sellers, Grasso added.
"If you're short, you can really be taken out very quickly," he said. "But I think the macro story is bearish for J.C. Penney."
J.C. Penney stock closed up almost 6 percent at $14.01 following word that Kyle Bass's Hayman Capital reportedly has a stake in the company to the tune of 5.5 million shares.
(Read more: Kyle Bass goes long JC Penney: Source)