Bearish Bets: 3 Stocks You Clearly Should Think About Shorting This Week
These recently downgraded names are displaying both quantitative and technical deterioration.
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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.
Polaris Sputters
Polaris Inc. PII recently was downgraded to Hold with a C+ rating by TheStreet's Quant Ratings.
The maker of powersports equipment has been in a miserable downtrend for months, with a channel of lower highs and lower lows since July. There is nothing bullish about this chart, and the indicators are telling us the same story. Money flow is bearish as can be and the RSI is bending lower at a very steep angle, which tells us more downside is coming to the stock.
There is no relief at the 20-day moving average; Polaris recently was rejected there on strong turnover. That is big money selling, nothing else. Let's target the $70 level for starters, then to $62 below that. Put in a stop at $99 just in case.
Nutrien Could Use a Feeding
Nutrien Ltd. NTR recently was downgraded to Hold with a C rating by TheStreet's Quant Ratings.
The provider of crop nutrients has been falling hard since late summer, as we see a double top was formed in July and August. That is a terribly bearish pattern if it continues to play out, which it did to Nutrien.
A series of lower highs and lower lows is a textbook definition of a downtrend. Where it stops is anyone's guess, but there are always opportunities to short stocks that are in severe downtrends like this name. Money flow is hellacious and has been for months. The gap lower last month represents strong resistance, too. The 200-day moving average (arrow) would be strong resistance; meanwhile, the stock moves lower. If short, target the $45 area, put in a stop at $59 just in case.
Helios Technologies Short Circuits
Helios Technologies Inc. HLIO recently was downgraded to Hold with a C rating by TheStreet's Quant Ratings.
The producer of motion and electronic control technology got hammered last week on very high volume for the biggest turnover reading in years. It was all selling post-earnings, which is bad news for the stock and chart. Money flow is poor and moving average convergence divergence (MACD) is on a strong double sell signal here. The gap lower represents strong resistance at the $47 level. The Relative Strength Index (RSI) is oversold and there may be bounce, but that would be a new short opportunity.
Notice the reaction low last week and how the stock is drifting toward that low just under $39. That is very bearish here, and we think the stock moves well under that low, so target the $30 level (aggressive) for a big move down, but place a stop at the gap level of $46 just in case.
At the time of publication, Lang had no positions in the stocks mentioned.
