After Sears Holdings Corp. (NASDAQ: SHLD) posted first quarter earnings on May 22nd the stock price actually rose from a closing price the night before of $36.56 to close above $42.06 last Friday. That’s a gain of 15% in just 7 trading days and other than a non-disastrous earnings report, there was no reason from the jump.

The bloom has come off the rose on Monday. Sears shares are down about 6.5% and while it’s not the worst performer in the general retailers sector Sears is contributing to the sector’s slight sell-off today.

Much was made of the company’s rewards program, called Shop Your Way, when Sears reported earnings. The company said that 74% of eligible sales were made to members of the SYW program. Some investors seem to think that Sears is somehow getting a membership fee from the program in the same way that Costco Wholesale Corp. (NASDAQ: COST) and Wal-Mart Stores Inc.’s (NYSE: WMT) Sam’s Club stores do.

That’s not so. It is free to sign-up for SYW and Sears even tosses in a few immediate discounts to sweeten the offer. An analyst at Credit Suisse told the NY Post, “Other than Groucho Marx, who famously would not join any club that would accept him, why wouldn’t someone join a free club that offers discounts?”

Sears does have clone of sorts for Amazon.com Inc.’s (NASDAQ: AMZN) Amazon Prime membership. Sears offers a Shop Your Way Max two-day shipping program for $39. But if Amazon had to raise the price by $20, what chance does the SYW Max deal have of being a money-maker for Sears?

So why did the share price drop today? More than half the outstanding shares of Sears were held short as of May 15th, so it could be that the shorts can’t believe their luck and want out now before some other reason comes along to boost the price again and they have to sit tight with Sears stock in their portfolio for a while longer

Volume will probably end up well below the daily average of 1.4 million shares traded and shares are down about 6.3% with less than an hour’s trading left on Monday at $39.46 in a 52-week range of $31.26 to $67.50.

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