Just considering the fact that Office Depot (ODP) shares jumped 16% on Tuesday in the wake of the company’s Q1 earnings report, it would be easy to conclude that the office supply retailer was finally back on track.
As veteran traders know all too well about wildly hot stocks, though, there’s always more to the story, and the stronger the market’s knee-jerk reaction, the stronger the reversal is once reality sets in again.
In other words, yes, ODP stock is very likely to come crashing down — and soon — following its post-earnings pop.
It isn’t just Office Depot that has taken traders for an unsustainable bullish spin lately, however. Nutrisystem (NTRI) and Zillow (Z) also soared out of control recently, and are equally vulnerable to a sizable pullback. Here’s why all three hot stocks shouldn’t be trusted to keep chugging at their current pace … or in their current bullish direction.