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.
Advance Auto Parts Goes Into Full Retreat
Advance Auto Parts Inc. (AAP) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The stock of the auto parts retailer was just massacred last Wednesday. Earnings fell short, it cut the dividend and guidance was weak. That was all the sellers needed to hear, and the avalanche of selling hit all day long.
You might think this was overdone, but there is probably more down to go, likely into the $60s or even lower. Buyers are just not interested in a name that cannot keep up, and when this happens the bears will start mauling.
Money flow is very poor and moving average convergence divergence (MACD) is on a double sell signal now. It's all bad for Advance Auto Parts as we target the $62 area. It could take time to get there and we may see a few violent up days, so we will use an aggressive stop at $95.
It Could Pay to Short MetLife
MetLife Inc. (MET) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
This big insurer has been punished lately, with a string of lower highs and lower lows. No doubt the high interest rate environment has made it challenging to invest premiums and proceeds for names such as MetLife.
The chart tells the story, too, as we see the Chaikin money flow firmly in bearish territory. The cloud is red, signaling that the trend is down. Also, the recent bump higher on lower turnover and then a rollover move is a clear indication that sellers are running the show. Consequently, we have an opportunity for some downside profits.
Let's target the low $40s from here, but put in a stop at $54 just in case.
H World Group Needs to Regroup
H World Group Limited (HTHT) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
We noticed the stock of this hotel company that mainly does business in China breaking the 200-day moving average recently, which triggered a massive flow of distribution. With a series of lower lows and lower highs the trend is definitely down here.
The money flow tells the story, as it's quite bearish. The Relative Strength Index (RSI) in the top pane is bending lower at a steep slope, which also is bearish. Indeed, there is not much support here until the mid $20s, but it could take a while. Let's aggressively target that area -- make it $26 on the nose -- but put in a stop at $42 just in case.
