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.
Wolfspeed Races Downward
Wolfspeed Inc. (WOLF) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
The semiconductor company shows a series of lower highs and lower lows, with the channel well-defined since the start of February. Each time Wolfspeed has tried to break out of the channel the stock makes a lower high. That is a severe bearish condition.
Notice the cloud is red and the RSI is making lower highs, as is the price chart. This stock has more downside to go. We'll set a target on the short side to $50 but just in case a stop at $64. One of the best trends to ride are channels as drawn above.
Marcus & Millichap Slips
Marcus & Millichap Inc. (MMI) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The chart of the investment brokerage company shows a big reversal downward just last week on big turnover. But the issue is the follow through to the downside, which happened toward the end of the week. A couple gaps down also put Marcus & Millichap in a precarious position.
Moving average convergence divergence (MACD) has rolled over to a sell signal while the Relative Strength Index (RSI) at the top is heading lower. The market has not been all that great for the past couple weeks, but this stock has performed even worse. That said, traders could set a target downward of $24 on a short play, but put in a stop at $32 just in case.
Nicolet Bankshares Slides
Nicolet Bankshares Inc. (NIC) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
Here is another miserable regional bank chart, with a steep drop in January but then even more downside after the Silicon Valley Bank debacle in March. The slide since the start of spring has been spectacular on higher volume.
The RSI at the top shows an oversold reading, but that is no reason to be a buyer in this stock. MACD is on a double sell signal, and the gap down from last week is going to be severe resistance on the way up. We like Nicolet for more downside action; set a target to $49 but put in a stop at $62 just in case.
