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 pharmacy chain has fallen sharply since a meteoric rise in January. In that month, RAD vaulted some 100% in a few weeks, perhaps driven by Reddit-type players looking to squeeze the stock. That worked for a time, but recent trends are poor and the stock is back below those January levels.
Money flow is weak and the cloud is red, with the Relative Strength Index (RSI) sloping downward at a steep angle. With markets at highs we frown upon stocks that are at or near lows.
Rite Aid is heading to single digits, but put in a stop at $19.
The apparel company has curled under and made a series of lower highs and lower lows. Money flow is terrible, and check out the moving average convergence divergence (MACD) -- a double bearish sell signal.
The 200-day moving average looms large here at the $76 level, a good 12% lower.
Ride the trend out here and target that 200-day moving average but put in a stop at $90.
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.