Each week we identify names that look bearish and can offer interesting investment opportunities on the short side.
Using technical analysis of those stocks’ charts and, where appropriate, recent actions and numbers from TheStreet’s Quant Ratings, we focus on three names.
While we won’t get into fundamental analysis, we hope this piece will give investors interested in stocks on their way down a good starting point to do further homework on the names.
Dollar Tree goes on sale
dollartree inc. (DLTR) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
This discount store has quickly turned bearish. Indeed, we could soon see a rapid movement towards the May lows. Volume trends were off the charts last month, and now with lower highs and lower lows, Dollar Tree is vulnerable to more downside effects. That huge gap is lurking and the support could be around $125.
With the share in the high $130, 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, stop in case it’s $150.
Exelixis does not excel
Exelixis Inc. (EXEL) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The oncology-based biotech has fallen hard on heavy volume. Money flows are showing strong outflows and the Relative Strength Index (RSI) is bending down at a steep angle, telling us that this stock is underperforming the rest of the market.
While May support is good at current levels, the momentum to lower prices further is quite strong. The cloud is also red, the 20-day moving average is bending downward and there is little reason to stay long. Look for a low teen transition, stop at $19.
Standard motorcycle products are sagging
Standard Motor Products Inc. (SMP) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The graphics of the auto parts maker is atrocious. You simply cannot confuse this stock with a purchase. It’s just a disaster. However, it is good for a bearish or short game, with weak money flow and a lower RSI on a steep slope.
The cloud is red and opens wider, telling us that the no-buy zones are getting wider. Look at the volume in August — it’s all distribution and very heavy. If it’s short, aim for the low $20, but stop just in case it’s $39.
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