Revisiting a Recent Observation
Recently, I detailed the bounce shares that have been hammered precipitously by 60% or more often see in a relief rally. I posited that this price action is the result of shorts getting carried away and overcrowding a trade. They then scramble and cover when the stock finds support.
Sears was one of the few names I mentioned in the analysis. It has rallied another $6 or roughly 20% higher to $39 and change from a few days ago in the $32-$33 range. Did anyone go long the stock or pick up some calls on SHLD? It seems like a tough proposition to be long for any significant period of time with the risk more supplier credit financing could get pulled. My gut tells me Sears will settle out in the low to mid 40's and start to sell off back into the mid 30's over the next month or two barring any disasterous news. Thoughts?