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.
Cree
Cree Inc. (CREE) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
This provider of LED and semiconductor products has fallen hard lately, with that huge fall in August coming after an earnings miss. Since then a series of lower highs and higher lows creates a triangle pattern, but at the lows. We find that these consolidation patterns end and proceed in the direction of the previous trend. In this case, it's downward.
Volume levels have swelled on the sell days. This is a good short here and to pile on more when the triangle breaks to the downside. The Relative Strength Index (RSI) is also rolling over.
Shake Shack
Shake Shack Inc. (SHAK) recently was downgraded to Hold with a C rating by TheStreet's Quant Ratings.
After reporting earnings last Monday this burger chain was belted hard and continues to follow through to the downside. Big-volume selling is not a reason to get long, as this stock looks destined to test the May lows around $57 or so. That is a nice move to the downside.
Look at the steep RSI downside in the top pane and the very weak money flow. The food may be good, but the stock is a short.
World Wrestling Entertainment
World Wrestling Entertainment Inc. (WWE) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
Wrestling is big money and this stock was a high-flyer last year, but those good times may be over for now. The stock took a big hit last week on very big volume and has yet to recover.
RSI is quite bearish, as is money flow, with the Moving Average Convergence Divergence (MACD) on a sell signal. This stock could be headed toward the $40s before long; the current triangle pattern is bearish.
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.
