Each week Trifecta Stocks identifies names that look bearish and may present interesting investing opportunities on the short side.
Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet's Quant Ratings, we zero in on five names.
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.
The toymaker's chart shows the stock has started to roll over and eventually will make a run to its 200-day moving average. Last week saw Mattel stop at the 100-day moving average, but all the indicators have turned bearish.
Some may want to hang on or look to grab this falling knife, but there are better fish to fry. However, a short here is probably a good bet with 20% of downside likely to come.
Money flow is weak and moving average convergence divergence (MACD) is on a bear signal. Look to target the $15 area but put in a stop at $21.
The developer of three-dimensional measurement and imaging software is pretty weak here, and with bearish money flow and a poor MACD this stock is just ripe for a good short play.
It isn't often an ideal setup has good timing with it, but that seems the case with Faro, as a bearish flag is in place. That means this stock is about to fail here, and a close under the 200-day moving average proves it.
If short put in a wide stop around $81 but target the $60 area.
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 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 "Bearish Bets" each week!
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.