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.
Dollar Tree Goes on Sale
This discount retailer has turned really bearish quickly. Indeed, we could see a fast move down to the May lows before too long. Volume trends were off the charts last month, and now with lower highs and lower lows Dollar Tree is vulnerable to more downside. That huge gap ahead is lurking and support may be around $125.
With the stock in the high $130s there is some opportunity here. Money flow is poor and moving average convergence divergence (MACD) is on a double sell signal. Set a target price of $120, put in a stop at $150 just in case.
Exelixis Isn't Excelling
The oncology-based biotech has fallen hard on heavy volume. Money flow is showing strong outflows and the Relative Strength Index (RSI) is bending lower at a steep angle, which tells us this stock is performing far worse than the rest of the market.
While the May support is right at current levels, the momentum to drive prices even lower is quite strong. The cloud is red as well, the 20-day moving average is bending lower and there is little reason to be long. Look for a move down to the low teens, put in a stop at $19.
Standard Motor Products Sags
The chart of the maker of automotive components is hideous. There is just no mistaking this stock for a buy. It is simply a disaster. It is good for a bearish play or short play, though, with money flow weak and the RSI bending lower at a steep slope.
The cloud is red and opening wider, telling us the no-buy zones are widening. Look at the volume in August -- it is all distribution and very heavy. If short, target the low $20s, but put in a stop at $39 just in case.