Is the Sears (SHLD) Short Squeeze Over? If So Look Out Below
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After squeezing higher earlier in the session, Sears Holdings (Nasdaq: SHLD) has now given up today's gains and is now 3 percent lower on the session. This has traders wondering if the massive year-to-date short squeeze has run out of steam.
Counting the gains earlier in the session, the year-to-date run-up in the retailer was nearing 70 percent.
The upside seen in the stock has not been fundamentally driven, but was driven by a short squeeze - a situation where short sellers are forced to buy the stock to cover previous bets against the company. The squeeze has been exacerbated by the low public float and rumors that Chairman and hedge fund manager Eddie Lampert would take the company private.
If today is the end of the short squeeze then look out below. Credit Suisse warned earlier that when it ends shares could head back down to a fundamental value of $20 per share. Shares were around $32 to start the year.
Counting the gains earlier in the session, the year-to-date run-up in the retailer was nearing 70 percent.
The upside seen in the stock has not been fundamentally driven, but was driven by a short squeeze - a situation where short sellers are forced to buy the stock to cover previous bets against the company. The squeeze has been exacerbated by the low public float and rumors that Chairman and hedge fund manager Eddie Lampert would take the company private.
If today is the end of the short squeeze then look out below. Credit Suisse warned earlier that when it ends shares could head back down to a fundamental value of $20 per share. Shares were around $32 to start the year.
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