Market Overview

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

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

Things are finally returning to normal for Sears Holdings Corp (NASDAQ: 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 (NYSE: 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

Posted-In: Citron ResearchLong Ideas Short Sellers Education Short Ideas Top Stories Trading Ideas General Best of Benzinga


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