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 furniture seller isn't getting any love, with its shares steadily moving down since Thanksgiving. Lovesac knifed through the 200-day moving average recently on elevated volume; there's not much interest in buying here.
Moving average convergence divergence (MACD) has rolled over and the money flow has turned bearish. The Relative Strength Index (RSI) shows an oversold reading, hence the stock may rally a bit, but that would be a good selling opportunity.
To dip a short toe in here, target the $50 level, but put in a stop at $71.
FirstCash is a first-rate disaster. The pawn shop operator has been pummeled recently on extremely high volume, indicating big institutional selling here. Money flow shows that negativity and the RSI is deeply oversold.
Is a rally coming? Possibly so, but that's not a buy signal. If anything, any rally up toward the 200-day moving average (around $77) should be considered another sell opportunity.
For now, maybe target $55 or so, but put in a stop at $72 just in case.
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.