Each week we identify names that look bearish and may present attractive investment opportunities on the short side.
Using technical analysis of these stocks’ charts and, where available, recent stocks and ratings from TheStreet’s Quant Ratings, we focus on three names.
While we’re not going to weigh in on fundamental analysis, we hope this article gives investors interested in falling stocks a good starting point to do some additional research on the names.
Nike just doesn’t
This major shoe and apparel maker blew a tire last week, reporting abysmal sales and advice. The chart was showing a dangerously low move ahead of this report, so last week’s move came as no surprise.
Money flow has been very weak while the cloud is red and the Relative Strength Index (RSI) is leaning down. As for the Moving Average Convergence Divergence (MACD), it is on a double sell signal with lower highs and lower lows on the chart. The stock is down a ton, but there is further downside potential here. Put on some shorts here, especially after the stock has rebounded. Target $70 area, stop at $100.
International paper is shredded
This packaging producer was drilled last month on big sales and very weak price action. Money flow has been poor as we witness the creation of the current bearish flag. This is a huge downside, with sellers taking over while buyers can’t seem to engage.
The relative strength index is weak and MACD remains on a sell signal; moreover, the cloud is red and also opens. If short, target the lower $20, but put an aggressive stop at $40.
Cognizant technology slides
The consulting and technology services provider has been in a miserable downward trend for months, and there’s no reason to believe it’s going to end anytime soon. With lower highs and lower lows on the chart, there is simply no support or buy of that name.
The money flow shows a strong distribution for weeks, the cloud is red and the relative strength index bends lower at a steep angle. This tells us that the SR momentum is strong and on the downside. If short, target the high $40 for now, place a stop at $64 just in case.
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