Using recent actions and grades from TheStreet's Quant Ratings and layering on technical analysis of the charts of those stocks, Trifecta Stocks identifies 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.
Etsy has been a darling for the momentum crowd all summer long, but now the trend is downward. In fact, the volume trends are extremely bearish, the Moving Average Convergence Divergence (MACD) on a sell signal.
The Relative Strength Index (RSI) has hit a low here around 30, so we might see a bounce, but these last couple weeks have seen vicious and concentrated selling. Momentum indicators are weak, and if there is a relief rally it is shortable.
This industrial name shows a bearish channel, with heavy turnover and poor relative strength. MACD just rolled over for a bearish signal (confirmed), and while this stock is at the bottom of the channel it might not be too late to put on the short. In fact, a move back to the higher end of the channel is ideal.
Heavy gap resistance is way up ahead. Volatility is expanding with the Bollinger bands opening up.
Allegiant just fell out of bed this summer, and while it picked up some buyers in August, the volume was weak and sold hard the next month. Wednesday's action was very poor, a higher volume break of support. RSI is weak and the momentum indicators are in trouble.
We could see another leg down here if the volume accelerates. MACD is also on a sell signal. This is a good sell opportunity even if it rallies up.
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.
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-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.