Trifecta Stocks is a long-only model portfolio, but we are anxious to give our subscribers insight into stocks that may pose interesting investing opportunities on the short side. Using recent actions and grades from TheStreet's Quant Ratings and layering on technical analysis of the charts of those stocks, we identify five names each Friday that look bearish.
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.
ADTN stock is off to a miserable start this year with several gaps lower on very high turnover. No doubt about it, institutions have been cutting this stock with no regard for price. We saw this potential back in October. The money flow is very negative but it was in Octpber/November, too. It's probably sideways now, but any rally is a sell.
SCHL stock has shown up many times on our bearish radar, for good reason. Even after a strong November the stock has fallen off a cliff, with heavy money outflows (bottom pane) and a steep drop in RSI (relative strength index). With the strong market, this stock is very weak -- not what you would expect. A break of the triangle should be bearish.
Sterling Construction has a defined downtrend channel here and may get some support at the 200-day moving average, but that may not hold this stock from falling more. The best scenario would be a sideways move (orange lines), but it's more likely the trend down continues.
This defense name is weak after getting blasted in December. The bearish triangle seems ominous here, and if it breaks there is much more downside than the low in early December. Money flow is weak and there is a bit of resistance ahead. OSi Systems is one of the weakest stocks in the defense group. Sell any rally.
PPL has a weak chart that started in the fall, but as you can see December was a rough month for this stock. Even in 2018 there is little movement, and the gap from mid- December is now steep resistance. RSI stopped at 50, and notice money flow is quite bearish. Sell any rally to $32 or so.
This commentary was originally sent to subscribers of Trifecta Stocks on Jan. 26. Click here to learn more about this portfolio, trading ideas and market commentary product.
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.