Clorox (CLX) reports earnings Monday, with short interest rising 20% ahead of the release. Historically, CLX has moved opposite to short positioning after earnings, suggesting a potential upside move. While stock returns offer little predictive value this time, the divergence between short interest and price signals an important setup.

Clorox (CLX) will report earnings Monday after the close.

Short interest in Clorox has risen 20% recently, signaling bearish sentiment. Historically, CLX tends to move opposite to the direction of the short interest post-earnings. This move has been larger than usual.

While stock returns typically provide predictive insight, in this case, they are near zero and don’t contribute significantly to the forecast.

The graph highlights the increase in short interest while the stock price remains unchanged.

Over the long term, the relationship between short interest and the stock shows negative correlation, indicating momentum strategies. At times, however, they are positively correlated, suggesting a reversal strategy.

Clorox has a moderately above-average short position, with a significant minority of analysts recommending a sell, higher than most stocks.

Credit: Bloomberg

Clorox (CLX) is facing heightened bearish sentiment, with short interest surging before earnings. Historically, CLX has shown a tendency to move opposite short positioning post-earnings. With analysts maintaining a relatively high number of sell ratings, the stock’s reaction could provide insight into whether this bearish positioning is justified.

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