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.
Hyatt Checks In as a Short
The hotel operator has been in a bearish trend since breaking down in early August. Notice the very heavy volume on that first push lower and the subsequent sideways move. This past week, though, the stock fell through the floor on heavy turnover again, this time breaking those solid summer support levels around $107. That spells trouble as the Relative Strength Index (RSI) points lower while moving average convergence divergence (MACD) is on a double sell signal crossover. What's more, money flow is awful and has been since breaking down.
Buyers are just not interested in Hyatt, so a short is in order. Target the $95 area, but put in a protective stop at $117 just in case.
Trip.com Isn't Traveling Well
The Chinese travel service provider has a slew of gaps in the chart, but what is notable is the trend, and that is down. There is heavy volume on the down days (circled) with little strength to the upside. Recent tests of the 100- and 200-day moving averages have had little effect on price action. Money flow is poor as well.
If a stock is not going up, it is vulnerable to going down, and that is the case with Trip.com. We think the June lows can be tagged here, which are about 14% lower, a nice profit objective. Target the $30.50 area, but set a stop at $40 just in case, giving this a bit of room.
Nice Doesn't Look So Nice
The provider of cloud platforms does not have a very nice-looking chart. Indeed, the stock simply has been bludgeoned over the past few months. Nice is down about 40% on swelling turnover, its MACD is on a sell signal crossover and money flow is bearish. Moving averages also are bending lower, which is another bearish sign.
Check out the volume bar in the middle of August -- so much selling on that day and nary a recovery. That means sellers are still active, and though this stock is oversold that simply means we find good entry points. Put a small short on here, and when the stock rallies add another layer. Set a target of $150 and put in a stop at $192. This stock is extremely bearish.