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.
Yelp Needs Help
The operator of an Internet platform that connects consumers with local businesses failed miserably on earnings. That big bar down was the day; the stock followed through lower and continues to make a run toward the summer lows.
There is plenty of momentum to the downside. Volume trends are bearish while money flow is weak. The gap is formidable resistance, but so is the middle bar, and the cloud is red and widening. You don't need much more description here -- bearish. Take a short play and ride it to $22, but place a stop at $33 or so just in case.
HCI Group Struggles
This chart of the property and casualty insurer shows a definitive trend of lower highs and lower lows, a bearish trait. HCI tried to recover in November but the stock has fallen back and is making a run toward the October lows.
Money flow expanded, but notice the Chaikin Money Flow (CMF) at the bottom is starting to falter. Also, the Relative Strength Index (RSI) is bending lower at a steep slope -- not a good sign. We could see a break of the triangle (yellow) in days, then a move lower. Target the $27 area, put in a stop at $42.
Delek Heads Downstream
The stock of the integrated downstream energy business is bouncing around here, but notice it has not rallied with the market over the past few weeks. That's a telling sign of weakness.
Delek is hanging around the 200-day moving average and is likely to fail miserably as money flows out of the name. Volume is up and is trending bearish while money flows are negative, too. Notice the cloud has just turned downward, and a break of this bear flag would spell trouble. Target the $22 area, put in a stop at $33.