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Is it possible that J.C. Penney Co. (NYSE: JCP) is reaching a bottom as far as its stock price is concerned? It seems hard to believe, but something unusual has happened. Many analysts have continued to downgrade the stock and the new short interest is signaling short-seller exhaustion.

The short interest for March 15 showed a drop of only about 2% to 61.008 million shares from 62.365 million shares as of February 28. Nominally this is still very high, but its days to cover ratio of 2.62 is actually the lowest reading seen in a year. The short interest snapshot below will show that.

Here are some of the analyst calls of late:

• March 25, cut to Underperform at BMO Capital Markets
• March 19, reiterated Buy with $25 target price at Argus (also on Feb. 28)
• March 19, Gilford Securities proposed a REIT structure, but it is bearish and even hinted at bankruptcy or liquidation scenarios
• March 6, cut to Neutral at Citigroup
• March 6, cut to Perform at Oppenheimer
• Feb. 15, maintained Underperform with $15 target at Credit Suisse

We are not trying to call a bottom here. In fact, shares are weak this morning .and at just under $15. The 52-week range is $14.20 to $36.89. What we cannot avoid is what the tape is saying, and that may be that the worst has been seen if the short interest has really exhausted to this point. The analyst sentiment is also so negative that we cannot even imagine how much this beaten stock would rally on the hint of any good news.