J C Penney Stock Hits Record Low After Ellison Bolts For Lowe's

Plus, AutoZone's earnings reaction has sent the stock on a wild ride today

Managing Editor
May 22, 2018 at 3:16 PM
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The stock market is lower this afternoon, as traders digest the latest trade developments between the U.S. and China. Department store concern J C Penney Company Inc (NYSE:JCP) and auto parts supplier AutoZone, Inc. (NYSE:AZO) are struggling, while photonic products producer Lumentum Holdings Inc (NASDAQ:LITE) is higher. Here's a closer look at what has shares of JCP, AZO, and LITE moving today.

CEO Shake-Up Extends J C Penney Stock Slide

J C Penney stock is down 4.2% to trade at $2.40 -- earlier hitting a record low of $2.28 -- after the retailer announced the departure of CEO Marvin Ellison, who is leaving to take the top position at Lowe's (LOW), effective June 1. JCP stock has now shed 25% in 2018, and is currently pacing toward a four-week losing streak. The shares have been pressured lower by their descending 30-day moving average since early March. 

Short sellers are likely cheering today's dip. Short interest is up 4.6% in the most recent reporting period to 122.47 million shares -- the highest since mid-January. This represents a whopping 42% of JCP's total available float, and 10 times the average daily trading volume.

AutoZone Stock Trades In Wide Range After Earnings

AutoZone stock initially jumped out of the gate, rising as high as $710 in early trading, after the car parts retailer reported a fiscal third-quarter adjusted profit beat on rising same-store sales, but has since reversed course to trade down 8.4% at $609.24. Weighing on the shares are disappointing revenue numbers and forecasts of higher wage-related expenses.

Short-term options traders are more put-biased than usual, per AZO'S Schaeffer's put/call open interest ratio (SOIR) of 1.07, which ranks in the 95th percentile of its annual range. This activity is continuing today, with nearly 14,000 options changing hands -- nine times the intraday pace, and volume running in the 99th annual percentile. The most popular is the weekly 5/25 600-strike put, where new positions are being opened.

ZTE Rumors Boost LITE Stock

Reuters reported overnight that the U.S. was nearing  a deal to lift the ban on U.S. firms selling supplies to Chinese telecom giant ZTE Corp. In response, several optical stocks are higher today -- even though the shares have come off their session highs after President Donald Trump contradicted the reports. Nevertheless, Lumentum stock is still up 1.1% to trade at $63.19. LITE stock has now gained 29% in 2018, and has relied on support from its 80-day moving average over the past two weeks. 

A short squeeze could provide tailwinds for LITE stock. Short interest edged up in the most recent reporting period to 10.95 million shares. This represents 18% of LITE's total available float, and would take four days to cover, at the stock's average pace of trading.


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