Sears' Post-Earnings Move Shows Why Sentiment Can Matter More Than Earnings

Loading...
Loading...

Things are finally returning to normal for Sears Holdings Corp SHLD, which popped 23 percent last week after reporting a $5.19 bottom-line loss.

The stock waned below its pre-earnings rate to about $4.08, and on Monday, it neared all-time lows in the mid-$3s, but was back up around $4.40 by Thursday. It closed down 2.94 percent at $4.29 Friday. 

But the earlier run is difficult to get over.

“They’re buying all the garbage right now, and they’re squeezing the hell out of the shorts,” Benzinga PreMarket Prep radio co-host Dennis Dick said Nov. 30 to justify the remarkable spike. Sears short interest is 13.88 million shares, which comprises about 60 percent of the float.

A Common Theme

The phenomenon is not isolated to Sears, and has been seen across retail over the last few sessions. The market is undergoing a sector rotation favoring value stocks over the previously trending tech, and shops like J C Penney Company Inc JCP are expected to reap short-term gains.

“It’s already come off the lows quite a bit, but this is the type of stuff the market is buying right now,” Dick said. “It’s the ‘comb the ditches,’ ‘dig for the garbage,’ ‘look for whatever has a high short interest’ [stocks]. That’s what people want.”

It’s a market favoring the uncool, the unpopular, but Dick sees midnight nearing for the Cinderella stocks: Sears’ magic has just about run out.

Related Links:

Traders See Signs Of Rotation Into Financials Amid Nasdaq’s Worst Day In Months

HubSpot Drops After Citron Says It Will Be Big Loser Of The Market Rotation

Loading...
Loading...
Posted In: Long IdeasShort SellersEducationShort IdeasTop StoriesTrading IdeasGeneralCitron ResearchDennis DickPreMarket Prep
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...