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.
ADP Is in the Dumps
Automatic Data Processing Inc. (ADP) is rated Buy with a B rating by TheStreet's Quant Ratings.
The chart of the provider of cloud-based human resources services shows a severe downtrend, with the stock failing to keep up with the rest of the market. That trend shows in the weak money flow, too, and the turndown in the Relative Strength Index (RSI, top pane).
Moving average convergence divergence (MACD) is on a sell signal, and the cloud is red and pointing toward lower prices. The support zone was breached on Wednesday, so we could see a move down to the July lows -- call it $210. Put in a stop at $240 just in case.
First Savings Falls Hard
First Savings Financial Group Inc. (FSFG) was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
This bank holding company fell hard in December and has barely recovered. The bank group has been strong but this laggard cannot seem to catch a decent bid.
First Savings does not move too much each day, but the chart shows a downtrend in place and formation of a bear flag. That means sellers are still in control after this recent move up. The cloud is red and the RSI was turned back. We could see a downward move of 5% to 7% to the January lows. Target the $19.20 area, put in a stop at $21.50.
Mission Produce Goes Bad
Mission Produce Inc. (AVO) was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
The fresh produce distributor had an awful report last month and fell off the mat. Money flow has been bearish, and while a comeback has been seen it is mostly a bear flag.
The cloud is red and the stock remains under all moving averages. RSI is bending lower at a steep angle, so there likely is more downside coming. Any day now the bear flag will break lower, so it's a good short play here. Target the $9 area, put in a stop at $13.
