McClatchy stock up 20 percent Tuesday, 3rd day in a row of big gains -- (updated with explanation)

McClatchy (MNI) shares closed at $1.80 a share Tuesday, up 20 percent over Monday's close. This is the 3rd day in a row of unexpected gains. McClatchy was up 36% on Friday and up another 37% Monday.

A commenter on this blog with significant experience in short selling attributes the gains to short sellers covering. I don't know anything about short selling. But in every willing transaction, the price is agreed on by the buyer and the seller, right? So it seems there are alot of buyers (over 700,000 shares changed hands today, normal volume is 530,000 shares) who have some kind of faith in the company's future. Help me out -- what am I missing?

Update: Via email, more info on short selling:

In this case, the buyers of McClatchy stock are surely the short sellers themselves. Here's how it works: A short seller borrows somebody else's shares of a stock he feels is due for a drop, then sells those borrowed shares immediately. Later, when the stock price has fallen, he buys back an exact number of shares and returns them to the person he borrowed from (usually a broker or institutional investor). The short seller, obviously, keeps the difference between the price he got by selling the borrowed shares and the lower price he paid to replace them.
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Apparently, a lot of investors have been shorting McClatchy stock. They're now buying up shares to replace the ones they borrowed and sold. Why now? Maybe there's a tax reason to collect short-selling profits right after the start of the year. Or maybe they figured the stock has gone about as low as it's gonna go, and they're cashing out now. In either case, the sudden jump in the MNI share price is surely caused by that demand. There's no other material event to cause such a bump.

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