Best Buy and Gap stocks seem long overdue for upgrades
Retail stocks are in focus today, as traders digest a strong start to the holiday sales season, including record-breaking online sales numbers for Thanksgiving and Black Friday. Additionally, Adobe Analytics is projecting $6.6 billion in Cyber Monday internet sales, which would mark the biggest online shopping day ever in the U.S. Several retailers are making big moves in early trading, too, including Best Buy Co Inc (NYSE:BBY), Gap Inc (NYSE:GPS), and J C Penney Company Inc (NYSE:JCP). Here's a closer look at how BBY, GPS, and JCP are performing today.
Best Buy Stock Trades Above Trendline Support
Best Buy stock was last seen trading up 1.3% at $57.74. The shares have put in a strong performance over the long term, up 35% year-to-date. And while BBY has pulled back since hitting a record high of $63.32 on Aug. 24, they have found a foothold near their 160-day moving average -- a trendline that's been ushering the shares higher since July 2016.
In the near term, this trendline support could be reinforced by peak open interest at the December 55 put -- which could create an options-related floor for BBY, as the hedges related to the more than 14,000 contracts housed here are unwound. The shares could also get a lift, should analysts start to react to Best Buy's positive price action. Currently, nine of the 14 brokerages covering BBY maintain a "hold" or "strong sell" rating.
Gap Stock Ripe for a Short Squeeze
Gap stock topped out at a two-year high of $30.94 earlier, last seen up 2% at $30.22. The security bounced sharply from the $25.50 region earlier this month, while a Nov. 17 post-earnings bull gap helped send GPS to its highest point of the year. The equity is now boasting a 2017 advance of 34.7%, and could now find support atop the round $30 mark.
A capitulation from some of the weaker bearish hands could send Gap shares even higher. While the stock's short interest-to-float ratio stands at a lofty 5.10 -- meaning it would take more than a week for shorts to cover these bearish bets, at the average pace of trading -- nearly 79% of analysts maintain a "hold" or worse rating.
J C Penney Stock Remains a Long-Term Laggard
J C Penney shares were up nearly 2% earlier, but were most recently seen 0.6% lower to trade at $3.24. This marks a change of pace for the stock, which has plummeted 60.4% in 2017 -- and hit a record low of $2.35 on Nov. 7.
Against this backdrop, it looks as if short sellers have started closing out of their winning positions. After topping out at 152.11 million shares in the Oct. 15 reporting period -- the most in at least 15 years -- short interest started to turn over in the Nov. 1 reporting period, down to 148.29 million shares. Nevertheless, this still accounts for a whopping 50.73% of JCP's available float, or 7.5 times the average daily pace of trading.