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.
The Sysco Kid
SYY shows us a chart of a stock ready to break lower. The recent move into the apex of this triangle was quite bearish, with heavy volume on that big candle day.
That was a down session, and is being followed up with another one. We see money flow is bullish, and that is probably the best and only positive indicator.
The Relative Strength Index (RSI) is bending lower while we have the Moving Average Convergence Divergence (MACD) is ready to roll over to a sell signal.
We could see a run towards the low $70’s and possibly $69, as the cloud is red too. Put in a stop at $81 just in case.
A Bear Flag Is Flying Here
Calix has formed a bear flag here, and with heavy volume on the recent down move there is enormous pressure on the stock.
Notice the bearish money flow and the on-going MACD sell signal. That is telling, and the gap that is open from back in July begs to be filled. That comes in at $45, a nice 14% down move from current levels.
Let’s target that area, put in a stop at $56.50, just above the 200-day moving average in case buyers come back in. I highly doubt that will happen.
It’s Tough to Get a Downtrend Back in the Tube
Colgate shows us a steep downtrend channel, with lower highs and lower lows. Further, the stock plunged through the 50-day and 100-day moving average recently, and the 200-day on strong turnover.
That heavy selling is not being re-considered, and prices continue to drop. The recent pull-up looks like a bear flag forming, and excellent spot for low risk entry point on a short play.
Target the $70.90 area; put in a stop at $77 just in case.