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.
CVS Health Looks Peaked
CVS Health Corp. (CVS) recently was downgraded to Hold with a C rating by TheStreet's Quant Ratings.
This provider of pharmacy services and health care benefits shows a defined pattern of lower highs and lower lows on the chart. But even worse is the money flow -- there just are not any buyers interested in CVS here.
The cloud is red and moving average convergence divergence (MACD) retains its bearish posture. Also, notice the volume bars in the top pane, with heavy volume days on the down sessions. That spells trouble. The Relative Strength Index (RSI) has been rejected at the 50 level once again, and any rally up in price has been sold vigorously. That means more downside and a short sale opportunity. Target the low $60s, put in a stop at $75 just in case.
Cirrus Logic Makes a Logical Short
Cirrus Logic Inc. (CRUS) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The maker of fabless semiconductors is just atrocious. Notice not just one but two gaps down on higher volume. The stock has been punished severely after a nice run higher back in January. Almost all of that move has been given back, and we suspect it happens sooner rather than later.
The cloud is red for starters, and the MACD is on a double sell signal while the RSI is extremely oversold. That is not a reason to buy, but certainly any rally is a reason to get short. Getting short here leaves plenty of downside to go and profit opportunity. Target that $70 area for a nice 10% gain down, but put in a stop at $90 just in case of a big short squeeze.
Victoria's Secret Is a Short Secret No More
Victoria's Secret & Co. (VSCO) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
The retailer of women's intimate apparel certainly has seen better days. The stock has been pummeled of late on very high volume. That surge in turnover has been extremely negative, with the stock making lower highs and lower lows. That's the definition of a downtrend.
MACD is on a sell signal and RSI is sloping downward at a steep angle, which tells us more downside is likely down the road. The cloud is red as well and money flow is weak. Is there anything else to do here but short the stock? Target the high teens, maybe $18, but put in a stop at $31 just in case.