Liz Claiborne (LIZ: sentiment, chart, options) was hit with some negative news when Standard & Poor's downgraded the long-term corporate credit and senior unsecured debt ratings on the company from to 'BB-' from 'BB+' due to the weak retail environment. S&P also took the ratings off review for a possible further downgrade.

The company had about $974 million of debt as of Oct. 4. "Although we expect the company will reduce leverage with cash flow and that leverage would trend to 5x by year end, we could lower the ratings if the company cannot reduce leverage as planned and/or if leverage increases further," S&P said in a statement.

As a result of the downgrade, the shares of LIZ have plummeted more than 22% today. The equity has fallen from newfound support at the 3 level and is pulling back toward potential support at the 2 level, which has buoyed the shares since late November.

Meanwhile, short sellers are cheering the drop in the shares. More than 9.5 million LIZ shares have been sold short, accounting for more than 10% of the company's float. Should any of these bears take some of these profits off the table, the stock could benefit from the buying boost.