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.
This provider of network hardware, software and services for communications networks has fallen hard the last couple weeks after poor earnings and a slew of selling. Notice the Relative Strength Index (RSI) fell from 70 to 30 in the blink of an eye. That spells trouble, but an oversold bounce is due.
Moving average convergence divergence (MACD) is on a sell signal and the cloud once again turned red. Money flow is bearish, so put in a short here at current levels; target the low $30s but put in a stop at $50.
Morningstar Isn't Shining
The provider of independent investment research has been struggling with higher volume on the selling of late. Money flow has shrunken considerably and the downtrend channel is in place. We could see a hold around $220 or so, but that would be asking much.
MACD is on a sell signal here, so put on a short here and target $200. Put in a stop at $255 just in case.
Open Text Keeps Closing Down
The provider of information management software gapped down recently and is a downward spiral. You might think there is little left to go on the downside, but there certainly is some meat left on the bone.
Money flow is uber bearish and the RSI is bearish with a near washout. That is not a buy signal. There are very strong volume trends and of course they are bearish, with heavy distribution from the recent gap down. Initiate a small short here and add more on a bump higher. Target the $20 area, place a stop at $34.