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.
Staar Surgical
Staar Surgical Co. (STAA) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The maker of implantable lens for the eye seems to be starting a staircase move downward. With increasing volume and very poor money flow, Staar is starting to take some hits, in our view.
Though the Relative Strength Index (RSI) is oversold and bouncing the price action is not impressive. Indeed, we could see a fall through the 100-day moving average (gold) any day now, which would set up a sharp move lower to the 200-day moving average. Moving average convergence divergence (MACD) is on a sell signal.
Look for lower prices ahead; put a target at $104 and use a stop at $145.
360 DigiTech
360 DigiTech Inc. (QFIN) recently was downgraded to Hold with a C rating by TheStreet's Quant Ratings.
The operator of a digital consumer finance platform in China peaked in mid-June and now shows a series of lower highs and lower lows. That is a bearish quality, and with money flow seeping lower there is plenty of downside potential here.
The RSI is sloping downward at a steep angle, which also is bearish. The 200-day moving average may be some support, but it isn't likely to hold a swath of sellers. MACD is on a sell signal.
If short, target the $18 level but use a stop around $33.
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.
