Sears Holdings: Is The Downtrend Over?

Sears Holdings (SHLD) has been mired in a downtrend since it first gapped lower in early May. Granted, the earnings reports since that have not been stellar, but the stock has lost fully -30% of its value.

Recently, the stock has been groping to find a bottom, and on Wednesday it looked like it took its first solid step. On Monday and Tuesday, the stock rose sharply, and on Wednesday it gapped above its downtrending 50-day average. Volume surged higher, indicating conviction behind the move.

The stock now looks like it has broken that downtrend line. What you want to watch for now, is if the stock can turn that former resistance into support, and bounce off of its 50-day on any pullback.

This stock also has considerable short interest. As of the most recent figures, short interest as a percent of float rose to 18%, a hefty figure. This could mean if the stock stays strong, any moves higher could be exacerbated by short covering.

click to enlarge