Each week Trifecta Stocks identifies names that look bearish and may present interesting investing opportunities on the short side.
Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, we zero in on five names.
While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names.
The developer of therapies for treating cystic fibrosis has been trying to make its way back after a devastating loss in early July. A nice series of higher highs and higher lows off the $185 level could be seen as a positive, but the $205 level seems formidable. On more than one occasion that level was met with rejection, and we think this is going to be tough to handle.
Indeed, a break of this trend line puts the recent bullish pattern in jeopardy, and that is what we see on this elongated bear flag. The June lows are in play and a good target at $185, but put in a stop at $207 just in case.
The operator of surgical centers had a shock this week with a strong move down on heavy turnover Wednesday. The stock had been taking a nasty turn prior to that and simply got run over by the bears.
Money flow has been solidly bearish, too, and the Relative Strength Index (RSI) shows a steep slope downward into oversold territory. That’s often a sign of exhaustion, and if there is follow through we see more downside.
The 200-day moving average looms large at the $42 level, a good 15% lower than current prices. Put in a stop at $52.
This commentary is an excerpt from “5 Bearish Bets” a weekly feature sent to subscribers of Trifecta Stocks. Click here to learn more about this portfolio, trading ideas and market commentary product.
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— Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.