Schaeffer's Market Observation Features Charlotte Russe and the AMEX Retail HOLDRS Trust.

CINCINNATI -- The stocks featured in this Schaeffer's Market Observation are Charlotte Russe (NASDAQ:CHIC) and the AMEX Retail HOLDRS Trust (AMEX:RTH). This article is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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Short and Sweet: Notable Short-Interest Increases, Nasdaq Style

Technical and Sentiment Analysis on Charlotte Russe (CHIC)

Lo and behold, with a scant few days left in September, the Nasdaq exchange reported its short-interest figures just in time for my third column of the week. How considerate of them! On Monday (http://www.schaeffersresearch.com/plus/bgscommentary.aspx?ID=17414), I offered a list of the biggest short-interest increases on the New York Stock Exchange and dialed up the biggest decreases in yesterday's (http://www.schaeffersresearch.com/plus/bgscommentary.aspx?click=home& id=17419) (Due to certain characters contained in this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field)column. Today, I'd like to turn my attention to the short-interest underbelly of the Nasdaq Market which, according to Wikipedia, trades, on average, more shares per day than any other U.S. market. The stocks included in the table below were among those scoring the biggest short-interest increases on a percentage basis during the past month's reporting period.

Recall that, as contrarians, we can view a heavy backdrop of short interest bullishly, as it could represent future buying power. This indicator is especially salient if it coincides with a stock displaying strong price action. (Increased short interest on an underperforming stock, on the other hand, is merely to be expected and is typically without contrarian implications).

Click the following link to see a Table of Short-Interest Increases: http://www.schaeffersresearch.com/wire?ID=17427

This table offers an intriguing menu of choices, with a number of decent Schaeffer's Equity Scorecard ratings speckled throughout the list. Checking out other factors, such as technical performance and options activity drew my eye to Charlotte Russe (NASDAQ:CHIC), a mall-based retailer of trendy but affordable women's clothing. CHIC operates more than 400 stores in 42 states and Puerto Rico.

Short interest surged by nearly 36 percent on CHIC last month, leaving more than two million CHIC shares sold short, representing more than nine percent of the equity's float available for public trading.

While short sellers have taken an interest in the stock, the speculative crowd, by and large, remains on the sidelines. In the October and November series combined, there are fewer than 1,600 open positions across all call and put strikes. This leaves plenty of untapped buying pressure waiting to propel the shares higher on any news or positive price developments.

Wall Street is equally split on the issue of CHIC. Five analysts look at the stock's long-term uptrend on the charts and deem it worthy of a "strong buy" rating. The remaining five brokerage houses following the stock continue to hover on the fence, awarding "hold" designations. Should the stock continue its upswing, there is the distinct possibility of an upgrade or two, which could spur some additional buying action.

CHIC has been building quite a bullish case for itself during the past year or so, surging 170 percent since its May 2005 low. Low points along this journey have caught support from the stock's 40-week moving average, which has not been breached on a closing basis since June 2005. The stock is now consolidating around the 28 level in hopes of breaking through into territory not seen since the first half of 2002.

Click the following link to see a Weekly Chart of CHIC Since May 2005 With 40-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=17427

The stock has handily outperformed its peers in the AMEX Retail HOLDRS Trust (AMEX:RTH). CHIC's weekly relative-strength measure has steadily risen for well over a year, recently pegging a new annual high.

Click the following link to see a Weekly Relative-Strength Chart of CHIC versus RTH Since January 2005: http://www.schaeffersresearch.com/wire?ID=17427

With two days left in the week, I plan to check out the short-interest decreases on the Nasdaq Exchange and then look at some notable short-interest ratios on both the NYSE and Nasdaq to round out the week. But I'm always open to suggestions if there's another breed of short-interest information you'd like me to dissect. Thanks for reading today and good luck with your trading, wherever it may lead you!

Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day and get entered to win an iPod Nano. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROAW13M&PAGE=1.

About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.