Nordstrom Downgraded Ahead of Holiday Shopping Season

Nordstrom's recent rally stalled near a key technical level

The shares of Nordstrom, Inc. (NYSE:JWN) are down 3% to trade at $35.98 today, after UBS downgraded the retailer to "sell" from "neutral." While the analyst in coverage kept a $30 price target, they warned that a weak holiday shopping season and tariffs could weigh on the company's earnings. Nordstrom reports third-quarter earnings after the close on Thursday, Nov. 21.

Since bottoming at $25 on Aug. 15, JWN had gained 48% through yesterday's close. However, that rally stalled near the shares' 200-day moving average, and the site of an earnings-induced bear gap from May.

Calls have been growing in popularity during JWN's recent pop. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 2.37 ranks in the 83rd annual percentile, indicating the rate of call buying relative to put buying has been quicker than usual.

However, there's a chance some of those calls could be a result of short sellers seeking an options hedge against any additional upside. That's because 30.5% of JWN's total available float is sold short, which accounts for 6.5 days of buying power, at the stock's average pace of trading.