"Death by Amazon" is sooooo 2016.
Fears that all retailers would be devoured by this tech giant has been a theme for years. And much of it has come true.
Toys R' Us just filed for bankruptcy. Many retail stocks have been in mature bear markets for years.
Yet we're coming to a point in time where all the easy money has been made to the downside... and it's time to start looking for turnarounds in retail stocks.
Here's one to watch over the next few weeks.
GES has traded from 35 to 10 bucks over the past few years. It's not been a good time for long term investors. Yet this year we saw capitulation followed by a hard reversal.
Here's the look on a daily chart:
The past two earnings events have been large gaps higher, signalling a change in the fundamental outlook of the company.
Over the past week, the stock rallied hard into 16.50, which is prior resistance. It's currently undergoing a consolidation phase. If sellers don't come in aggressively, then the stock will complete some kind of a bull flag pattern.
Here's where it gets interesting...
20% of the float is short.
That means 1 out of every 5 shares of stock is currently loaned out to speculators who think the stock will drop.
Now think about this if you were a short seller. The stock has already run to 10 bucks and just saw a massive gap higher after earnings. There may, in fact, be improving fundamentals.
Where are you going to stop out?
If I were short, I'd use 16.50 as a stop. And so would many others.
If we clear recent highs, there's a high probability of a short squeeze higher.
How To Trade It
GES doesn't have a very liquid options board, so I would look at swing trading stock. If you did want to limit your risk, I'd look at just buying the Nov 17 calls for .45 as a full risk trade, and selling half on a double.
You'd need to see a move to 17 for that call option to double, which isn't very far away.