Gap shares jumped 12% after the company announced a new CEO for Old Navy. The brand just reported declining comparable sales. Investors saw a press release with the word "CEO" in it and decided that was worth a billion dollars in market cap.
This is how the market works now. Sales go down. You hire someone. Stock goes up. The new executive has not done anything yet. Cannot have done anything yet. Arrived at the office on Thursday to find the sales already declining. But the chart went vertical because retail traders believe that hiring a person is the same thing as fixing a problem.
Old Navy sells cargo shorts to people who have given up. The comparable sales declined because fewer people bought cargo shorts this quarter than last quarter. The solution is apparently one human being with a different title. Not a new product. Not a pricing strategy. A name on a door.
Gap stock went up 12% because someone updated their LinkedIn profile. That is the entire story. A man or woman accepted a job offer and clicked "Share with network" and the share price moved like they discovered oil under the fitting rooms.
The technical analysis here is very clean. The 50-day moving average is completely irrelevant. The RSI means nothing. The Fibonacci retracement levels are astrology for people who own Bloomberg terminals. What matters is that Gap has invented a new financial instrument: the CEO announcement as revenue substitute.
Whoever bought shares at the open on Friday is now explaining to their spouse why they invested their savings in a company that sells elastic-waist khakis to divorced dads based on a press release about middle management. The new CEO could quit on Monday and the stock would probably go up another 8% on hopes they will hire an even newer CEO.
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