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.
Sun Isn't Shining on Enphase Energy
The solar power stock really has fallen on hard times lately. Enphase has been in a miserable downtrend for months, starting last December when it double-topped at $340. That seemed to be the end of it for Enphase, with a spectacular 60% decline from there.
Will Enphase rebound? I'm sure it will, but look at the many times the stock tried to rally, only to be hit in the face with heavy selling. Let's face it, the big money is not buying this stock anytime soon. Consequently, we look for more downside for Enphase as it makes lower lows. Target the $120 area, then $110 area, but put in an aggressive stop at $155 just in case.
Sensata Makes Sense as a Short
The maker of sensors and electrical protection components has fallen sharply on pretty heavy turnover the past couple weeks, and interestingly, this stock is right near last October's lows. There are not many stocks approaching those levels, but this one has done so on the back of pretty poor technicals.
Sensata's moving average convergence divergence (MACD) has rolled over again and remains on a sell signal, while the money flow is bearish and relative strength is flat on its back. One would think a 40% drop in seven months would be no mas, but we still see more downside action. Target the $32 area, put in a stop at $40 just in case.
Ansys Is Slipping
The provider of engineering simulation software shows a very weak chart, with lower highs and lower lows after breaking the uptrend line at the start of this month. Even this latest rally has been on poor volume (yellow bars), and with bearish money flow and a bearish crossover signal on the MACD there is room for this stock to fall.
The cloud remains red, and a test of the 200-day moving average recently was on lower turnover. That means big money is not participating; hence, we see more downside with a short play. If short, target the $230 area (aggressive), put in a stop at $320 just in case.