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 will 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.
This big snack giant has seen better days. Action Alerts PLUS holding Pepsi is in the middle of a sharp downtrend, with the channel well-defined. The stock is oversold but that is not a reason to buy. Note that the death cross is imminent, and more resistance in store (circled). This could be shorted to the lower end of the channel here.
CULP stock may seem to be recovering from a nasty turn since the beginning of the year, but it appears to us this is just a rest before the next move lower. Note the death cross of the 50-day and 200-day moving averages, often a sign that institutions won't want to get involved. The relative strength index (RSI) has been stymied at the 50 level, and volume levels have been low as the stock tries to recover. Short any rally up to the circled mark.
Gartner Group seems to have achieved a double bottom, but alas this stock stopped Wednesday right at resistance, the 200-day moving average. This was the second break point since early February, and note the recent turnover has been weak, indicating little interest by the big money players. There is gap resistance ahead.
This company has a nasty downward channel with some heavy selling that occurred in mid- February. The 200-day moving average is some support but that could easily fail. The RSI on the top pane shows lower highs. We could ultimately see this stock fall toward the October lows (around $18).
United Therapeutics has just been mauled by the bears since the start of the year. The stock has barely seen an uptick in 2018, falling some 22% year to date, and there seems no relief in sight. The shares are way oversold and RSI is on its back, so there is no reason to buy. While UTHR may have a violent rally soon, use that to short or sell the stock. This one is nasty.
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This commentary was originally sent to subscribers of Trifecta Stocks on March 9. 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.