Radio Shack

RSH appears to be a good short setup.

Radio Shack surprised on earnings and saw a jump in price. Barron's notes that the improved earnings will likely disappear soon:

RadioShack sold some $70 million in digital television converter electronics, a figure that represented virtually the whole of the outperformance of the sales total. The converters are needed by television viewers who receive over-the-air analog signals, but need a converter box when broadcasters abandon analog and switch to all-digital transmission systems.

That initially had been scheduled to take place in February, but the government pushed the transition date back to June 12, so RadioShack has gotten an extra quarter of sales of the products to show for it.

Naturally, there could be a spike in sales just after the June 12 transition, as television viewers who didn’t adopt a digital format scurry to catch up. But the sales won’t last much beyond the June 12 transition date. And, chances are, RadioShack’s ’’secret sauce” sales spike ends then, as well.

Here is the five year chart, showing price running into a long-term trendline:



And the one year chart: