J.C. Penney (NYSE:JCP) CEO Ron Johnson may be running the mid-priced retail chain into the ground, but he’s clearly the master of the conference call.

How else to explain JCP shares jumping as much as 11% on heavy volume in a down market Friday — after hacking up its second epically bad quarterly earnings report in a row?

Volume was more than double JCP’s daily average less than two hours into the session. Meanwhile, the percentage of shares sold short had climbed to more than 35% by the middle of last month, according to S&P Capital IQ data.

Johnson must have scared some shorts out the stock with his soothing comments on the conference call with analysts, because there sure was nothing good about Penney’s latest results.

Johnson, the former head of Apple‘s (NASDAQ:AAPL) retail business, is hell-bent on wholesale revolution at boring but formerly stable JCP. Unfortunately for shareholders, so far it looks less like the American Revolution and more like the Cultural Revolution.

JCP posted a wider-than-expected loss on a 23% plunge in sales. Same-store sales, sales at stores open a year or more and key measure of a retailer’s health, fell 22%. Online sales declined by a third, and gross margin shrank to 33% from 38% — the sixth consecutive quarter of margin contraction

And to top it all off, JCP withdrew its guidance for 2012.

That all comes on the heels of May’s report in which the retailer posted a wider-than-expected loss, weak sales and — most alarmingly — suspended its dividend.

Even after Friday’s rally, JCP is still off 30% since mid-May — and there’s little reason to expect this little bout of strength to last.

Perhaps shorts were obliged to cover when Penney said it expects to end the year with more than $1 billion in cash on the balance sheet. (Betting on a cash-crunch probably looked like a good short idea when JCP pulled the dividend three months ago.)

But make no mistake: JCP is a disaster.

Analysts were skeptical about Johnson’s strategy to drop Penney’s regular parade of coupons and sales in favor of everyday value, fearing the shift would confuse, anger and alienate customers.

Boy, were they right. The latest quarterly report shows that even online sales are circling the drain.

“Ron Johnson’s ideas for recreating Penney are imaginative, but he might be over-stepping in the effort to become cheap chic headquarters for America,” wrote Bernard Sosnick, an analyst at Gilford Securities, who rates shares at hold. “Because Johnson’s intuition about what America wants has been faulty, as has been execution of his new policies, there is reason to take the sweet visions he presents with a grain of salt.”

Make that a mine of salt. There’s little overlap between Apple Stores and one of America’s biggest mid-priced retailers, as Johnson is discovering the hard way. If he can pull this turnaround off, JCP will be an incredible bargain at current levels, but why take the risk?

There’s no visibility on earnings, sales or margins. Investors are quite simply flying blind. Friday’s rally, for whatever reason, offers a rare chance to sell JCP on strength. Retail investors would be wise to take it.

As of this writing, Dan Burrows held none of the securities mentioned here.