Less than 24 hours after we exposed the dash-for-trash strategy that has worked so well this year - buying the most-hated/most-shorted stocks - one of the most-shorted names in the market provides a perfect case study.

Stitch Fix, the apparel company that uses software to predict what customers want, exploded higher after posting earnings results that beat estimates and issuing a better-than-expected sales forecast for the current quarter.

Stitch Fix reported fiscal second-quarter adjusted profit of 12 cents per share on sales of $370.3 million Monday evening. Both exceeded the highest analyst estimates compiled by Bloomberg. Stitch Fix also projected third-quarter sales that topped the average estimate and said that active clients rose to 3 million during the quarter, an increase of 18 percent compared with the same period last year.

SFIX is up a stunning 27% pre-market in a massive short-squeeze...

Over the past six months, as the stock lost more than two-thirds of its value, short interest in Stitch Fix surged, inching even higher during the past week, with about 33% of shares available to borrow on loan to short sellers on Monday, according to S3 Analytics data. That’s up from 31% a week ago.

The question is - will Stitch Fix go full VW as hedge funds are forced out of their shorts?