EXCLUSIVE: Short Sellers Load Up On Retailers Into Black Friday

Retailers have been on a rise this year with the SPDR Retail ETF XRT up 41.95 percent compared to 26.71 percent on the S&P, but many investors are sceptical this trend will continue.

Karl Loomes of Sungard’s Astec Analytics gave Benzinga exclusive data on retailers, heading into the biggest shopping day of the year. Astec Analytics measures real time security lending data, which correlates strongly with short selling.

JC Penney JCP shares crossed over the ten dollar psychological level Wednesday after touching $6.42 last month; part of the recent rise can be attributed to CEO Mike Ullman’s 112,000 share purchase. Despite the recent pop, short selling has spiked significantly higher over the past several sessions. This means buying must have been especially heavy, as shares overcame the short selling to rise more than ten percent.

Loomes noted two companies that have not been following the increased selling trend, Macy’s M and Sears Holding SHLD.

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Macy’s share borrowing is down 13 percent over the past seven days, correlating with a 52 week high Wednesday. Last week’s Barron’s article highlighted the company as one of several retailers set to rise heading into the holiday season, which many analysts say caused the recent rise.

Similarly, shares of Sears are up almost five percent this week while security lending is down six percent. Both the drop off in security lending and increase in share price are likely, in part, due to a rumor that the company would sell its Canadian unit on Monday. The company later denied this rumor.

Moving forward to Friday’s trading, volatility will be high in not just retailers, but also consumer goods as reports on turn out and buying behavior are released. Because volume will be light, the opportunity for retail traders to profit from fundamentals will be increased.

Good luck and happy Turkey day!