Special Report: Steer Clear From These Retail Stocks

CHWY and W have both fallen sharply since our 'Stocks to Sell' report went live

Oct 14, 2021 at 11:50 AM
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Last month was a doozy for investors. We've discussed how investors can manage September seasonality ad nauseam, but what about the other side of the coin? What stocks out there could fall victim to the seasonal doldrums, or are staring up at daunting technical ceilings? The trading experts at Schaeffer's Investment Research compiled an "8 Stocks to Sell Now" report to highlight eight such stocks, including two from the retail sector. Click here to view the entirety of the special report.

*Editors Note*: As of Oct. 14, since '8 Stocks to Sell Now' went live on Sept. 25, CHWY has shed roughly 10%. W has shed 16%.

Low-Margin CHWY Could be Takeover Fodder

Pet supply name Chewy Inc (NYSE:CHWY) suffered a recent earnings miss and now carries a notable 24% year-to-date deficit. As a hot commodity in a low-margin business, the company will have to be careful, as it could be easily overpowered, should Amazon.com (AMZN) or Walmart (WMT) enter the pet supply space.

CHWY Stock Chart

Call traders have been crowding CHWY during the past several weeks, leaving ample room for bears to enter the ring. Specifically, the security?s10-day call/put volume ratio of 2.34 ranks in the 80th annual percentile at the ISE/CBOE/PHLX, indicating more than two calls have been purchased for every put during the past two weeks.

Wayfair Stock at Ripe for Downgrades

Furniture maker Wayfair Inc (NYSE:W) is down more than 7%on a year-over-year basis. In 2021, the stock has formed a year-long rounding top pattern, with its50- and 200-day moving averages providing resistance. Also up ahead sits the $290 level, an area that's 10 times the company's initial public offering(IPO) price.

W Stock Chart

Despite the technical troubles, 10 of 19 brokerages in coverage maintain "strong buys." Among short sellers though, bears are in full control, with short interest up 40% since February. An unwinding of optimism among call traders could weigh on W though. This is per the equity's 50-day call/put volume ratio at the ISE, CBOE, and PHLX of 1.42.


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