Deere Still Has Potential For More Short Squeeze Upside

Deere & Co DE is giving up another 1.1 percent of its post-earnings move on Tuesday, but long-term investors shouldn’t sweat the pullback. Deere shares likely got ahead of themselves due to a post-earnings short squeeze, so a pullback isn’t surprising.

Last week, Deere delivered an exceptionally strong Q3 earnings report, which initially sent shares higher by more than 12 percent. While the quarter certainly inspired plenty of bullish buyers, there was likely a significant amount of short covering in the mix. As of the end of October, Deere was the fifth-most shorted stock in the entire S&P 500.

Jim Cramer addressed the Deere short squeeze and how investors should play the stock this week on "Mad Money."

“Short-squeeze or not, Deere has got a lot going for it now, and I wouldn’t be surprised if the earnings estimates are still too low, which means the stock remains a buy if we get more weakness,” Cramer said.

According to shortsqueeze.com, Deere still has plenty of short interest. Deere’s current short percent of float sits at 10.95 percent with 9.2 days to cover.

This lingering short position means that there is still potential for another short squeeze if Deere can deliver more positive fundamental news in the near future.