CarMax’s short interest stands at 11.08% of float, showing a typical pre-earnings increase. Market direction before earnings often forecasts post-earnings performance. Using our Black APP on the Bloomberg terminal with available market data we analyze how the short interest rising and a potential 9% move, a short squeeze is possible.

CarMax (KMX) has a significant short position, with 11.08% of its float being shorted, down from a high of 12.7%.

This has resulted in a high crowded score, ranging from 52 to 67.5.

The squeeze score incorporates the crowded score along with a function of the recent return. Currently, the crowded score for CarMax is 62.5. A score above 70 is considered significant, and the stock frequently reaches that level.

CarMax’s short position typically does not correlate with the stock price.

However, in the week leading up to earnings, there is a correlation: the short position tends to grow as the stock price declines and shrinks as the price increases.

This pattern indicates that momentum traders are selling on the way down and buying on the way up.

CarMax also exhibits a pattern where the stock continues in the same direction after earnings as it did in the week leading up to the announcement.

This suggests that the market return serves as an accurate forecast for post-earnings movement.

CarMax is down this week which could meanings earnings will surprise negatively.

The short as percent of float is up this week, following the usually pattern of short up with the market down.

CarMax moves 7.06% on earning and is expected to move 9% on earnings.

A move up for CarMax could push the stock into squeeze territory.

CarMax’s pre-earnings trend of rising short interest and declining price hints at a possible negative earnings surprise. However, a post-earnings rally could push CarMax into short squeeze territory.

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