Each week we identify 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 three 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.
Tesla Is Running Out of Juice
The electric vehicle pacesetter finally looks to roll over here. There is some support around $205 or so, but with weakness in the markets this stock is in trouble.
Never mind that Elon Musk seems to be distracted with Twitter TWTR. We have seen the Tesla chart form a bear flag and on Wednesday the stock fell sharply and was rejected at the falling upper Bollinger Band. That is bearish, and if we see Tesla close below $200 there are much lower targets. The Relative Strength Index (RSI) has rolled over and the cloud is red -- all bearish signs. Put in a short here; target $175, but put in an aggressive stop at $240.
Advanced Micro Devices Fizzles
Poor earnings guidance and bearish price action on AMD mean this stock has more downside to go. Semiconductor stocks have been weak of late, as money flow has been poor while the cloud is red. RSI is rolling over, and like Tesla above this bear flag is starting to move in the direction of the trend.
Moving average convergence divergence (MACD) is on a sell signal. While the stock is down sharply on the year, there is plenty more downside to go. Target the $45 area, but place a stop at $70.
DaVita Goes Down
The provider of kidney dialysis services fell sharply last week when the markets were rallying and is showing very poor relative strength. That was probably due to a miss on earnings, but frankly the chart was not bullish leading into the print. The enormous volume on that selloff tells us buyers are not interested in DaVita.
MACD has rolled over to a sell signal and the chart shows that if we see a break under $68 there is much more downside to come. Let's target the $50 area; put in a stop at $78.