Short-Covering Rally Coming in This Retailer: Adami

After hours the Fast Money traders took another look at JCPenney and what’s next for the stock, after the department store announced a sudden management change.

Specifically, the executive in charge of marketing, Michael Francis, left JCPenney after less than a year of service. CEO Ron Johnson had poached Francis from Target last fall.

Francis was responsible for all marketing, planning and product development and was the executive charged with re-imagining the department store experience with everyday values.

However that new experience didn’t resonate well with shoppers and in May, Penney’s said same-store sales during the first three months of the new pricing model fell a far worse-than-expected at 18.9 percent. It also posted a large net loss and cut its dividend.

As negative as developments sound, they may actually be good, if you're a trader.

Fast Money pro Guy Adami, managing director of stockMONSTER.com, thinks events have presented an opportunity -- to go long. With so much negative sentiment and heavy short interest, he expects a short-covering rally.

“If the stock trades down to $23, I think you’ll see a flush as shorts get nervous,” says trader Guy Adami. “If you’re nimble, for a trade I’d go long.”

Posted by CNBC's Lee Brodie

Read More from Fast Money:

> Simple Strategies Behind Supersized Successes

> 10 Top Stocks for the Long-Term Investor

> Top Apple Related Stocks for 2012

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Trader disclosure: On June 18, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long USB; Joe Terranova is long TCBI; Joe Terranova is long SBUX; Joe Terranova is long UPL; Joe Terranova is long HYG; Joe Terranova is long CNX; Joe Terranova is long IBM; Joe Terranova is long AAPL; Joe Terranova is long WMB; Joe Terranova is long SJM; Joe Terranova is long SNDK; Joe Terranova is long LPX; Joe Terranova is long NXPI; Joe Terranova is long EMC; Joe Terranova is long WFM; Joe Terranova is long NAT GAS FUTURES; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Dan Nathan is long JULY 6 PUTS; Dan Nathan is long JULY 32.28 PUT SPREAD; Dan Nathan is long OCT 10/5 1X2 PUT SPREAD; Dan Nathan is long JULY 14/12 PUT SPREAD; Dan Nathan is long JULY 190/180 PUT SPREAD; Dan Nathan is long JULY 67.5 PUTS; Dan Nathan is long JAN 20/25 CALL SPREAD; Dan Nathan is long JULY 33.38 CALL SPREAD; Dan Nathan is long SDS; Mike Murphy is long INTC; Mike Murphy is long TGT; Mike Murphy is long LNG; Mike Murphy is long SBUX; Mike Murphy is short WMT; Simon Baker is funds long AAPL; Simon Baker is funds long CVX; Simon Baker is funds long WFC; Simon Baker is funds long V; Simon Baker is funds long DIS

For Rick Sherlund
The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies.

For Hans Humes
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For Amelia Bourdeau
Nothing to Disclose

For Jeffrey Harte
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