Today’s Chart of the Day was shared on Twitter by Michael Antonelli (@BullandBaird). The chart shows the performance of Francesca's Holding Corp. ($FRAN), over the past five days. Michael points out that this retail stock has been surging over the past few days after a strong Q2 earnings report. The stock soared 59.42% today and is up more than 200% over the past two days. This is a textbook example of a short squeeze. Short interest was extremely high, at 41% before the earnings report. Short interest can be used as a contrarian signal when it's at an extreme. When short interest is very high, it's often a sign that everyone who wants the stock to go down has already taken a position. These shorts have to buy to close out their position eventually. When price starts to rise unexpectedly, shorts are collectively forced to buy to cover to avoid a substantial loss or margin call, sending the stock sharply higher.
Chart of the Day - Wednesday, September 11th, 2019
September 11, 2019
