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.
Cohen & Co.
The chart of the investment management company shows death by a thousand cuts. The stock continues to bleed and displays a narrow trend of lower highs and lower lows.
Money flow is weak, and now we are below the cloud, which spells trouble. The Relative Strength Index (RSI) slopes downward, and with stocks making all-time highs you avoid names with this bearish a trend.
If short, target the 200-day moving average (at $11), but it might take a while, so put in a stop at $20.
This biotechnology company shows a similar trend channel of lower highs and lower lows. This is all-out bearish, as with a market showing all-time highs we should also see stocks near their highs. Enanta is far off, and when a stock isn't going up it's going to go down.
Moving average convergence divergence (MACD) has rolled over now, and the recent rally up to the 20-day moving average was poor and deflected. That's a bad sign, so if short put in a stop above the channel at $47 and ride it down to the mid $30s.
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.