2 Retail Stocks in a Post-Earnings Spiral; Plus, Buffett’s New 17.5M Share Stake – Schaeffers Research (blog)

U.S. stocks are on mixed footing today, as traders weigh a de-escalation in rhetoric from Pyongyang against disappointing earnings results from the retail sector. Sports retailer Dick’s Sporting Goods Inc (NYSE:DKS), luxury retailer Coach Inc (NYSE:COH), and banking concern Synchrony Financial (NYSE:SYF) are three stocks in the news this morning. Here’s a quick look at what’s moving shares of DKS, COH, and SYF.

DKS Dives to Multi-Year Low on Bleak Earnings Guidance

Dick’s Sporting Goods stock is trading at its lowest price since October 2010 after reporting a second-quarter earnings miss and offering a disappointing full-year profit forecast. The retail stock, down 17.8% at $28.71, has now widened its year-to-date loss to 46%.

Some speculators were bracing for a big downside move from DKS. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DKS stock carries a 10-day put/call volume ratio of 2.25, which ranks in the 83rd percentile. This ratio means that options traders bought puts over calls at a much faster pace than normal ahead of this morning’s quarterly report.

Coach Gaps Lower as Revenue Falls Short

Coach stock has plummeted 12.2% to $42.07, after the luxury retailer missed Wall Street’s quarterly revenue expectations — and predicted full-year revenue just below the consensus estimate. Today’s plunge has pulled COH down to test its 160-day moving average, which previously served as resistance in late 2016 before switching roles to act as support in February and March.

Options players were taking a skeptical approach to COH ahead of the retailer’s results. The stock sports a Schaeffer’s put/call open interest ratio (SOIR) of 1.39, which ranks in the 94th percentile of all other ratios annually. This means that near-term options traders have rarely been more put-heavy in the past year.

SYF Stock Rallies on Buffett Boost

SYF is up 3.6% at $30.72, bolstered by a regulatory filing that revealed Warren Buffett’s Berkshire Hathaway has snapped up 17.5 million shares in Synchrony Financial, while simultaneously dissolving its stake in former SYF parent General Electric (GE). Today’s pop higher has SYF extending a recent breakout above its 80-day moving average — though recent resistance from the $31.-31.50 region looms overhead, and the stock remains down 15.3% year-to-date.

Unlike Buffett, options traders seem unimpressed with struggling SYF shares. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Synchrony has racked up a 10-day put/call volume ratio of 1.48, which ranks in the 80th annual percentile. This indicates traders bought to open puts over calls at a much faster pace than usual during the past couple of weeks.

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