Each week we identify names that look bearish and may present interesting investment opportunities on the short side.
Using technical analysis of these stocks’ charts, and where appropriate, recent action and scores from TheStreet’s Quant Ratings, we zero in on three names.
While we won’t weigh in on fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further work on the names.
Dollar Tree goes on sale
Dollar Tree Inc. (DLTR) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
This discount retailer has really gone downhill fast. Indeed, we could see a quick move to the May lows before too long. Volume trends have been off the charts this past month and now with lower highs and lower lows, Dollar Tree is vulnerable to more downside. This huge gap is looming and support may be around $125.
With the stock in the high $130s, there is some opportunity here. Money flow is bad and the moving average convergence divergence (MACD) is in a double sell signal. Set a target price of $120, put a stop at $150 just in case.
Exelixis is not great
Exelixis Inc. (EXEL) was recently downgraded to Hold with a rating of C+ by TheStreet’s Quant Ratings.
The oncology-based biotech has fallen hard in high volume. Money flow is showing strong outflows and the Relative Strength Index (RSI) is bending lower at a sharp angle, which tells us that this stock is significantly underperforming the rest of the market.
While the May support is right at current levels, the momentum to drive prices even lower is quite strong. The cloud is also red, the 20-day moving average is bending lower and there is no reason for it to be much. Look for a move into the low teens, stop at $19.
Standard Motor Products Sags
Standard Motor Products Inc. (SMP) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The auto parts manufacturer chart is horrible. There is simply no mistaking this stock for buying. It’s just a disaster. It is good for a bearish play or short play, however, with weak money flow and the RSI bending lower on a steep slope.
The cloud is red and opens wider, telling us that the no-buy zones are widening. Look at the volume in August — it’s all distribution and very heavy. If it’s short, aim for the low $20s, but stop at $39 just in case.
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