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.
After posting some good earnings and very robust guidance, Nike pulled down a bit, and while some retail has been decent this stock looks quite vulnerable. Notice the poor relative strength, sell signal on MACD (moving average convergence divergence) and some elevated turnover of late. That is some institutional selling, so we may have more downside to come. The 200-day moving average looms as support.
Banks have been under considerable pressure since rising volatility hit the markets in early February. Action Alerts PLUS holding Citigroup has been one of the worst performers of the group, falling sharply and well below the 200-day moving average. That was near the early February low, and it cut through with ease. Sellers have been hitting this name for weeks and this past Friday there was a leg down. Buyers still cannot get to it, and the indicators are still bearish. Any rally to the 200-day would be a sell opportunity.
Want to find out the three other big-name stocks we think look good short this week and how to play them? Click here for a trial subscription to Trifecta Stocks and get "5 Bearish Bets" each week!
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.
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.