Blame the shorts!
That's right, blame the shorts for today's fantastic action, at least if you are bullish.
So often the short-sellers, those who profit by betting against stocks hoping they will drop for whatever reason, are fingered for spreading negative rumors or speaking negatively, sometimes without even revealing that they are shorting something.
I know I do care about the shorts pressuring stocks. I prefer a rule that slows down selling so bids can build because it is a lot easier to knock a stock down than to build one up. Plus, I am acutely conscious that there are those who think that I am okay when stocks go up on a straight line and I am real critical when they go down that way.
Not true. I am conscious that I do have a lot more readers and viewers that would like stocks to go higher not lower but at the same time I don't like it when program buying - large bursts of buy interest - obliterates sellers and walks stock up too high making them ripe for a fall.
But days like today are reminders of how important short selling can be to an up market, what role they play when they throw in the towel and give up on what had been a sensational situation, virtual annuity for the shorts, or one that can be expected to crater if the right circumstances come to the fore.
What do I mean when I say that shorts can propel stocks higher?
Today's about the best example I have ever seen of how it is done.
Let's start with Hasbro (HAS) which happens to be on tonight's show. Ever since the surprise liquidation of Toys R Us, Hasbro has been stuck shadow boxing with inventory. Given that no one knew that Toys would just close one day, it was particularly onerous for producers like Hasbro which are just doing their job trying to meet demand for their basic products.
When the doors close on an institution like Toys R Us you would think that someone would know where all of that excess inventory went to. But it was all but impossible to tell. So for several quarters in a row Hasbro was, justifiably, caught flat-footed with too much inventory.
Today investors -- especially short-sellers -- were shocked that Hasbro reported an insanely big upside surprise, a 21 cent gain when people were looking for a loss of 11 cents. The shorts were gaffed deeper than when my wife hooked a red snapper off an oil rig in the Gulf of Mexico during the Tarpon Rodeo.
Of course, I would like to think it didn't have to work out that way.
First. Brian Goldner, CEO of Hasbro said on Mad Money the last time he was on that the inventory was now under control and it was time to play offense.
If you didn't believe him all you had to do was listen to Mark Butler, from Ollie's Bargain Outlet Holdings (OLLI) , who told you he had an amazing winter because he had so much toy inventory from Toys r Us. So that's where it got to. When Ollie's, a fabulous chain unto itself, finished selling, the all-clear was sounded and Hasbro went from being an annuity short to being the long it always used to be. I doubt it will ever go back to that second-fiddle status again. Not with all of the upcoming programming and the creative way it's being packaged.
Apple had been adamant that Qualcomm was a terrible monopolist. Qualcomm had been arguing that it was simply doing what it does best, designing the best next generation chips.
If Apple won the case then you could argue that Qualcomm, which pays a big dividend, would have to suspend the dividend and slash numbers to the point where it was incredibly overvalued. The smart money was betting that Apple would win the case because so many companies over time have challenged Qualcomm for monopolistic pricing.
But there was another whole strain of thought that said if Apple loses, then Qualcomm could be in the catbird seat because it does have the next generation chips that are coveted by all handset makers worldwide.
So on the one hand you have a stock that could be devastated by a victory for Apple. On the other hand you have a company that could have a stock that is ridiculously cheap if it wins the case.
What very few people expected was that Apple would settle with Qualcomm on day one with extremely generous terms for the semiconductor maker. Now it's good news for both companies as Apple's stock has been on fire ever since it made a deal with Qualcomm. How could it not? The alternative was an uncertain bet on Intel (INTC) modems that would be a year later than Qualcomm could deliver its product.
But Qualcomm turned out to be one of the most heavily shorted stocks I have ever seen and to go from goat to darling in one afternoon was too much for this poor stock to bear. Turns out there just wasn't that much supply between where the stock was when David Faber broke the news, in the $60s and up here in the $80s.
I don't even think it is done going higher given the windfall it has now that Apple has had to place all of its business with the pseudo-monopolist.
Then there's Twitter (TWTR) . People have become adjusted in the last year to the vicissitudes of owning a stock that's trying to clean up bad guy posts and make the site more hospitable. There had to be a level, you figure, where everything is scrubbed clean and there are no more issues with scatological postings and horrendous haters who just keep changing their names and never let up.
Guess what? It ended. This was the quarter where advertisers like HBO for its Game of Thrones bonanza, chose Twitter as a centerpiece. This was the quarter where the sports highlights, like every home run that's hit, became mainstays. And that's why it was able to blow the numbers away. I predict a terrific follow through here.
Finally there's Kohl's (KSS) . Two weeks ago we had Michelle Gass on and she told a wonderful story about a pilot project with Amazon (AMZN) that was going incredibly well for both companies. Amazon was using Kohl's as a depot to return things without having to wrap them up. Kohl's got the benefit of having shoppers walk through the stores to get to the Amazon depot. It has given the 200 stores a huge boost.
But yesterday we "learned" that Kohl's had a weak February. I put air quotes around "learned" because you would have known from our interview that was the case.
The stock got hammered on the news and the expected shortfall. The shorts were all over the darned thing. Why not? Nothing's worse than owning a department store stock, correct?
Today we learned something different about Kohl's. Today Amazon took a 1% stake in the company and the two companies decided to expand the return depot to all of Kohl's 1100 stores.
It's an amazing home run. Talk about if you can't beat 'em join 'em.
So Kohl's stock flew higher.
Yep, short-sellers provided the ammo for today's biggest winners. It's been that way for a while, it's just not been this crystal clear for a very long time.