Sears Holdings - SHLD

Danger, Will Robinson, Danger? The above is daily chart of Sears Holdings (SHLD) and it shows a big break below the 50 day moving average this past Friday. The weekly chart below not only shows a bearish engulfment but a major test of the 20 week moving average.

SHLD caught my attention following remarks by junior billionaire Eddie Lampert ("junior" relative to a guy like #2 billionaire Warren Buffett). Lampert, the chairman of SHLD who engineered the merger of Sears and K-Mart a few years ago, said he's eyeing aquisitions: Sears Holdings eyeing prospects. But short on details the stock fell 4.5% on Friday. Lampert needs to grow through acqquisition to keep his stock from collapsing, or come up with a better plan for his existing stores. Fundamentals at Sears and K-Mart surely won't be keeping the stock up; Q1 same store sales a K-Mart fell 4.7% and dipped 2.4% at Sears. Go to most malls in America and you'll find Sears on one side and JC Penney (JCP), or a Federated (FD) store on the other side. My observation is that SHLD has maintained profitibility and stretched margins by raising prices and cutting back on staff enabling JCP to clean Sears' clock. JCP recently said it sees same store sales rising out to 2011.

This isn't to say I'm bullish on SHLD's competitors, including Penney's, as consumers face increasingly strong headwinds from high gasoline prices, a shutdown of the home equity ATM and sagging employment (if the gov't didn't use bullish assumptions in its official employment data, payrolls would look a whole lot worse, but that's another post for another time). It's just that SHLD seems ahead of the pack in deteriorating fundamentals. Lampert has made money for shareholders - no doubt about that; it's going to be very interesting to see how he continues to do so with non recession proof businesses dependent on the burdened consumer.