"Massive short squeeze run?" JP Morgan's Charles Grom raises the question of whether we'll see a short squeeze run of retail shares when same store sales are released this Thursday much like we saw last month. If you remember, June's same store sales were not strong by any means rather they were more or less on plan for what is traditionally a weak summer sales season (buyers are on the beach not the in the malls.)
Still these comps weren't as abysmal as Wall Street expected. Since expectations were low, the upside surprise helped shares gain +3% v. S&P 500's +1.9% gain. Grom says that this Thursday we may once again see a short squeeze run up in retail shares. Why? Well take a look at the volume of investors betting that retail shares are headed downward. Could these guys get stuck short covering on Thursday?
Right here on this blog last week I wrote about short interest building among retail names. The shorts are building even more this Monday! Take a look at the department stores: Dillards is at 8.9%, Saks 10.6%, J.C. Penney 4.8%, Kohl's 3.3%, Macy's 2.7%. Electronics retailers Best Buy is at 9.7% short interest and Circuit City is at 8.1%. Discount retailer Target is still at 2.65% but Wal-Mart is one of the few discounters that the shorts seem not to be piling on top of: just at .89% short interest.