Short City Update: Radio Shack - cover short

Posted Dec 16th 2009 4:30PM by Joseph Lazzaro
Filed under: RadioShack Corp (RSH)

An update on a short position: Radio Shack Corp. (RSH), recommended on August 4, 2009 at a price of $16.13: cover short.

They don't all work out. Further, one of the surest signs that an economic recovery is gaining strength concerns previously fundamentally-supported short recommendations that don't perform.

Radio Shack still faces formidable hurdles: too many retail (and wholesale) electronics stores in the U.S., too many Radio Shack stores, and a likely sales decline for Radio Shack in FY 2009 and FY 2010 do not bode well for RSH, but that hasn't stopped the shares from probing $20 twice.

True, the double $20 test could form a short-term double-top, but the calculation here is to close the position and take the $4 loss. Suddenly, over the past three months, it's becoming very risky to short stocks in this market.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: electronics, radio shack, RadioShack, retail, shorts