Keep Gap Stock on the Bench This Month

Gap stock is among the worst-performing stocks to own this month

Assistant Editor
Sep 1, 2021 at 1:38 PM
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August proved to be a big month for the S&P 500 Index (SPX), as the benchmark crossed the 4,500 level for the first time, scored its seventh-straight monthly win, and notched its 53rd record close on the year. This month, while the index boasts plenty of notable tickers that have historically outperformed in September, it's a good idea to take note of those that have a tendency to take a seat before fall starts. One such name is Gap Inc (NYSE:GPS), which finds itself on Schaeffer's Senior Quantitative Analyst Rocky White's list of 25 worst performing stocks for September. Now that the company has released its second-quarter earnings report, there's no better time to take a look at the Gap stock's technical setup.

Worst of September

According to the list above of SPX stocks with the worst returns in September, GPS averaged a loss of 0.8% over the last 10 years, and finished higher just twice. In addition, the general retailer is just one of two names from its sector to appear on White's list, with the other being CarMax (KMX).

At last check, the security is up 0.3% to trade at $26.81. While Gap stock sports a 32.6% year-to-date lead, the security is coming off two straight months of losses -- shedding nearly 22% in that time. On the charts, the 60-day moving average has  put pressure on the shares since mid June. The $27 area has also emerged as a short term ceiling, with the equity set to lock in its fourth-straight close below the level -- something GPS has managed to avoid since February.

GPS Chart September 1

Yesterday, Telsey Advisory Group cut its price target on Gap stock to $33 from $38. Of the 13 analysts in coverage, nine rate the security a tepid "hold." Meanwhile, short interest rose 9% in the most recent reporting period, and the 15.02 million shares sold short now make up 7.6% of GPS' available float

Options traders have been more pessimistic than usual. This is per the equity's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 82nd annual percentile of its annual range. This means long puts have been picked up at a quicker-than-usual clip of late. 

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