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.
Alarm.com Sounds a Warning
The stock of the provider of cloud-based services for smart residential and commercial properties is a five-alarm fire. It has seen heavy selling over the past few months, lower highs and lower lows and barely even a move up during last week's melt-up in the markets. That spells trouble.
Notice, too, that the moving average convergence divergence (MACD) is now on a sell signal, money flow is bearish and the Relative Strength Index (RSI) bends lower at a steep angle. There is plenty of volume in this name, with heavy selling from the end of October. If short, target the low $40s, but put in a stop at $60 just in case.
Walker & Dunlop Sags
The provider of multifamily and commercial real estate financing products shows a bearish pattern of lower highs and lower lows down to some support around $82. However, that area was penetrated last week, and if the $81 zone breaks there is little support down to $70. That would be a good target area.
RSI is flattening out and money flow is not significant. Put a stop at $88, aggressively go for that low $70s area.
B&G Foods Goes Stale
The distributor of shelf-stable and frozen foods has been a miserable performer and has been under that 200-day moving average for most of the year. Nothing good happens under the 200-day MA, of course, and with a series of lower highs and lower lows B&G Foods remains a short play.
Though the stock has fallen sharply over the last few months, there is still more downside possible. Money flow is bearish and MACD is on a fresh sell signal. The RSI just rolled over, too -- nothing good here for BGS. Hence, add a short here; put in a stop at $17, target $8.