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 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.
Foot Locker came out last week with decent earnings but a poor outlook, and the stock got drilled on some big turnover. Moving average convergence divergence (MACD) is now on a sell signal as price is below key moving averages.
There is some support around the 200-day moving average but that is about $8 lower, so I suspect another test of that moving average is in order. FL is a good short candidate to the mid-$40s.
While TPIC's chart shows a series of higher lows, the stock is starting to roll over here with resistance at the 50-day moving average. Note the rejection on the momentum indicator, above. Volume has been declining on this recent rally while the slope of the Relative Strength Index (RSI) is steep, indicating some downside is left.
A good target is the 200-day moving average (lower arrow).
Innophos is struggling at the 200-day moving average, and while the rest of the market is making new highs this stock is stalling out. As a result, this stock may start to decline, and makes for a good short candidate right here.
Momentum is weak and notice the high volume selling that took place in early August. Buyers are absent, so sell any rally.
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 two 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 "5 Bearish Bets" each week!
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.