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.
Xencor Zig Zags
Xencor Inc. (XNCR) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
The clinical stage biopharmaceutical company has been on a roller coaster ride. Up sharply at the start of the year, this stock did an about-face and came crashing down after peaking in early February. The recent pull-up by the stock is portraying a bear flag, with lower turnover on the way up to the 200-day moving average. This should be a spot where the stock is rejected, so it's an ideal place for a new short position.
Notice the cloud is red and moving average convergence divergence (MACD) remains below buy signals, while the Relative Strength Index (RSI) just turned down at 50. Those are bearish qualities. If short, target the low $20s, put in a stop at $32.
Community Bank System Stalls
Community Bank System Inc. (CBU) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The regional banks have been bloodied for a month, and Community Bank System is one of the many that have been hit hard. We don't care the reason why, but rather just see how the money is flowing. For CBU, the answer is out of the stock.
MACD is on a double sell signal, while the RSI is bending lower at a steep slope, which tells us more downside is coming (poor action versus the rest of the market, and when the market turns this will perform worse). Target the high $30s and then perhaps lower, put in a stop at $52 just in case.
Southern First Bankshares Slides
Southern First Bankshares Inc. (SFST) recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
Here is another regional bank that has been beaten down hard over the past few months. However, this beating started in December for Southern First; a fall from the low $50s to the current level of $30 is a dramatic move down.
Money flow has been bearish since the start of February, and that was before the Silicon Valley Bank blow-up. RSI is a slow glide down to oversold, but that is no reason to buy. MACD is still on a sell signal and the cloud is red. It's a great setup for a short play. Target the low $30s to start, but put in a stop at $33 if the stock makes a turn up.
