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.
Kimberly-Clark Has the Sniffles
The maker of tissue and personal care products was enjoying a great spring, but when summer came along the stock pulled a Jekyll-and-Hyde maneuver. Kimberly-Clark has been a stock to avoid the past three months, with a series of lower highs and lower lows plaguing this consumer staple company.
Moving average convergence divergence (MACD) is on a sell signal while the Relative Strength Index (RSI) shows this stock cannot even close above the 55 RSI reading. That isn't good for a stock within a strong group (see Unilever UL, Procter & Gamble PG). Every turnover this week also tells us big money managers are likely selling the stock in earnest. It all means lower prices ahead, and when that 200-day moving average breaks, the dam goes, too. Target the mid $120s on a short play, place a stop at $138 just in case.
Viasat's Signals Aren't Good
The stock of the satellite communications company has been pounded recently on very high turnover. Viasat had one of its satellites malfunction during deployment and sellers just took this name apart at the seams. Heavy volume to the downside with follow through means more selling is likely to come.
We can see support on the chart going back to last December, but that likely won't hold up on the next test because the selling has been too intense. Buyers are not around, the MACD has turned to a bearish signal twice in two months and the RSI is flat on its back. Target the low $20s here, but put in a stop at $35 just in case.
Lakeland Financial Struggles
The bank holding company for Lake City Bank has been fairly steady but is having trouble mounting a rally above the 200-day moving average. That is a key level; let's call it a zone from $53 to $55. The stock has been under assault for weeks, but resistance from the June highs is putting pressure on Lakeland.
Money flow is still weak, and even though RSI had rallied a bit we are now overbought on this indicator, yet the stock price has not broken out. That spells trouble, so we could see a move back at least to the May lows -- call it $43. For shorts, that would be a nice 23% gain to the low $40s, but even a move to recent support at $46 would be profitable. Put a stop in at $63, which is the 200-day moving average.