Retail stocks are rallying while short interest rises in XRT ETF. Key players like Walmart, Costco, and Home Depot are under scrutiny ahead of tomorrow's retail sales data. Could a short squeeze be imminent?

Retail stocks have been rallying, and short interest in the XRT ETF has also increased. Retail sales are expected to be lower this month.

This situation reflects a reversal strategy: stock investors are buying shares, while short sellers are betting against them with the retail sales figures will be announced tomorrow.

Walmart (WMT), Costco (COST), and Home Depot (HD) are seeing rising prices and increased short interest. Graphs could be useful to visualize these trends.

Carvana and CarMax both have significant short positions. Carvana has 12% of its float shorted, while CarMax (KMX) has 10%. These stocks are heavily shorted, which could result in a short squeeze if they were to rally.

CarMax (KMX) is scheduled to report earnings on September 26. Historically, KMX's stock has moved about 7% on earnings reports, so a positive earnings announcement could potentially lead to a short squeeze.

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