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.
Some Chinese telecom names were pounded on Wednesday with word they were going to be delisted on the New York Stock Exchange. That may or may not happen, but the damage has been done. However, China Mobile's stock was showing weakness far earlier than when this news hit.
The channel of lower highs and lower lows began in mid-August, the cloud is red and Moving Average Convergence Divergence (MACD) is still on a sell signal. Money flow is also bearish, and as we see there are gaps everywhere (often the case with these ADR names).
If short, put in a stop at $29 and ride this down to $22 or so.
NeoGenomics was pounded Wednesday on big volume, and though it closed well there are some bearish undertones. MACD rolled over and the Relative Strength Index (RSI) came in hard; if we see some follow through there are moving averages waiting below for a test (50-, 100- and 200-day).
We don't see too much downside here; that run since November was tremendous, but when a big shot is heard and the stock breaks a pattern we must be alert to a new pattern arising.
Put a stop in at $54 and ride this name to $43 or so.
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.