I don't think the majority of trading today was short covering. I think the hedgies may have already covered and maybe in the process of going long. That may be what the buying was today. Let's remember Hedge Funds go both ways.
What I think will happen is the hedgies are going to burn the retail shorts. It would be very easy to do at this point. This thing is wound up like a spring. When they force the retail shorts to cover, we may see a 3-4 point pop in one day.
Nasdaq issues short numbers once per month. They are behind a few weeks so it's impossible to know what the current numbers are for sure.
But I would say just based on recent trading there are still a ton of shares short.
4.8 mln shares out of 12.3 mln shares were shorted on Apr 8. This was even before the quarterly report came out. Looks like some one with significant resources decided to take the price down. In todays rally 1.5 mln shares exchanged hands. Even if all the shares were bought by shorts, 3 mln shares still need to be covered.
no, that isn't a bullish kicker pattern. a kicker pattern has the current day's open equal to (or very close to it) the previous days open, and the previous day is a red candle and the current day is a white candle. the key missing ingredient with today's action is that todays open was lower than fridays open.
I tend to believe the company's explanation about the increased inventory too -- in fact given their sales expectations, UGG inventory is probably low. But it's obvious that the institutions looked at the huge percentage jump, then at the reduced 2nd Q guidance, and dumped in a hurry. The stock is a small cap and a small blip in most institutional protfolios, so it would not hurt that much for the typical institution to get rid of its entire position.
Alot of shorts are left. Actually, the downward momentum attracks expanded short interest. Company to meet with analysts in early June. If they firm up and start shipping already large order commitments by large and new prestigious retailers, they may need to raise guidance for this fiscal year, after reporting next quarter.
What is not understood is that the company lost a lot of revenue last year because it could not fill orders. They had to air ship product directly out of manufacturing. They won't make the same mistake this year and to me the increase in inventory will prove to higher margins and revenues.
I am not sure how many of the shorts remain. The 4 plus million shorted shares were there before the precipitous fall after earnings. Since then the float has turned over at least a couple of times. My hunch is that most shorts have covered.
Well, tomorrow will be important for follow-through because the cost avg. cost of the float has certainly been reduced significantly. We could very well find ourselves in a new range as new lows are bought and sold for profit.
Thanks again for your comments and insight. You seem like a wise trader. Maybe I can learn a few things.
Yeah, I was frustrated also. Today, I'm not celebrating but feeling better. I think we all should, at least a little. Tomorrow will be important. I still think there's a ton of shorts who haven't covered.
I agree with kissoflife on that one. When they decide to cover in big numbers, or are forced to, due to news or some other reason, that's when we may see some real fireworks.