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.
Momentum names can run up with vicious price action, but what goes up can also come down. Okta is one of those names that show amazing volatility. When the stock of the provider of identity management platforms was running strong the dips were great chances to get on board for a while. But the stock broke down in mid-February and that was a red flag.
The stock now shows a bearish triangle, which is likely to resolve to the downside. Money flow is bearish and the recent rejection of the 200- and 20-day moving averages is telling.
Some support lies around $200, but this could really get nasty with a break there. Put in a stop at $235 just in case.
Much like Okta (OKTA) , this cloud communications name is starting to fail miserably. Volume is starting to swell on the down sessions and big institutions are starting to cut the stock. The recent high in February shows a nasty reversal candle, and a Moving Average Convergence Divergence (MACD) sell signal followed right afterward. The channel is well-defined here with lower highs and lower lows.
There is plenty of air beneath Twilio; the easiest target is about $257, which is far, far away -- good profits if you're short down to that level, but put in an aggressive stop at $380.
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.