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 maker of tobacco products fell hard recently as earnings were a disappointment. We would wait to see if there is a rally up and if the sellers have cleared out. That doesn’t appear to be the case, however, and it seems this stock is headed lower.
Resistance is above $45.50 or so; if the stock gets there we could see more selling commence. Money flow is poor and moving average convergence divergence (MACD) is on a sell signal, while the Relative Strength Index (RSI) is steep and bending lower. All negative signs.
Look to short Altria down to the high $30s, but put in a stop at $50.
The maker of data storage devices reported some solid earnings, but that was not enough to put Western Digital out of its downtrend. The channel is wide, long and well-defined here. Until the stock breaks the pattern of lower highs and lower lows there is little for a bull to do other than hope.
The bears, on the other hand, can short and sell with bold spirit. The cloud is red and volume trends are bearish. RSI at 50 seems to be a reflector; this stock looks ready to move down into the $40s.
Put in a stop at $62.
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.
Want to find out the other stocks we think look good short this week and how to play them? Click here for a trial subscription to Trifecta Stocks and get “Bearish Bets” each week!
— Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.