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.
Nike Just Isn't Doing It
Nike Inc. (NKE) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
This big shoe and apparel maker blew a tire last week, reporting horrendous sales and guidance. The chart was showing a perilously lower move before this report, so that move last week was no surprise.
Money flow has been very weak while the cloud is red and the Relative Strength Index (RSI) is bending lower. As for moving average convergence divergence (MACD), it is on a double sell signal with lower high and lower lows on the chart. The stock is down a ton, but there is the potential for more downside here. Put in a short here, especially after the stock has bounce. Target the $70 area, put in a stop at $100.
International Paper Is Shredded
International Paper Co. (IP) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
This packaging producer was drilled last month on big turnover and very weak price action. Money flow has been poor while we see creation of the current bear flag. That is a huge negative, with sellers taking control while buyers cannot seem to get engaged.
The Relative Strength Index is poor and MACD remains on a sell signal; also, the cloud is red and opening up as well. If short, target the low $20s, but put in an aggressive stop at $40.
Cognizant Technology Slides
Cognizant Technology Solutions Corp. (CTSH) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The provider of consulting and technology services has been in a miserable downtrend for months, and there is no reason to believe that is ending anytime soon. With lower highs and lower lows on the chart, there is simply no support for or buying of this name.
Money flow shows strong distribution for weeks, the cloud is red and the Relative Strength Index is bending lower at a steep angle. This tells us the RS momentum is strong and to the downside. If short, target the high $40s for now, place a stop at $64 just in case.
