J C Penney Company Inc (NYSE:JCP) stock made a big jump on Wednesday in what looks like a short squeeze triggered by a little bit of news from a company presentation.
And we do mean a “little bit.”
The quote making the rounds early online came from CEO Marvin R. Ellison, who told investors at Piper Jaffray that “sales through Memorial Day were positive.” That was enough to send JCP stock up 7% in Wednesday’s trading, continuing a monthlong rebound falling a precipitous decline of roughly 40% from March through mid-May.
JCPenney’s first-quarter sales reported last month fell well short of expectations, though the company did cut down its losses to a better-than-expected 22 cents per share. JCP shares bottomed shortly thereafter, and have rebounded nearly 20% since.
Wednesday’s move has brought JCPenney shares up to their 50- day moving average, which is sitting right on top of the 200-day and is threatening to collapse underneath to form the bearish “death cross” signal.
The move likely squeezed out some of the numerous shorts in JCP stock. As of the most recent data (out May 31), roughly 32% of JCPenney’s float was sold short. At normal volume, it’d take more than four days for every short to exit their position.
From here, traders will need to see shares at least hold this level to be more confident that any more upside is ahead.
