3 Bearish Setups for the Week Ahead
These names are not keeping pace with the nascent market rally. Here’s how to play them from the short side.
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Welcome to another edition of TheStreet Pro’s Bearish Bets, our weekly feature where we identify three stocks that look bearish from a technical perspective and may present interesting investing opportunities on the short side.
While we will not be weighing in with fundamental analysis on these issues, 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 contained herein.
Alibaba Pushes Much Lower
There is no relief for Alibaba Group (BABA) as it continues a downtrend of lower highs and lower lows. Knocked down this past week by some negative rumors and the Hong Kong market as well, the big China retailer only sported so-so results for its wildly popular “singles” day. No matter, the chart was headed lower anyway, the stock under a swarm of pressure by sellers.
MACD is on a sell signal, money flow has turned bearish and the relative strength is nearly oversold, so we have some more downside to work through. The June low is very close, but there is more support around $77. That would be our first target. Put in a stop at $105 just in case.
Nebius Falls Victim to Nvidia Contagion
Earnings from Nebius Group (NBIS) were really good but the guidance was a bit worrisome. Yet, the chart was not setting up too well for the bulls anyhow, with a downtrend channel established of lower highs and lower lows.
The stock sits at the lower end of the channel, so it could break within days as the volume remains elevated to the downside.
MACD is still on a sell signal, and check out money flows, very bearish, and the relative strength at the top is not quite oversold yet.
There’s support way down at $75 — that is quite a distance from current levels but breaking this channel sets up for that test. Put in a stop at $145 just in case, although there is a good chance this is going to work its way toward our target.
Digi Gaps Below Support and Hangs By a Thread
Nothing worse than to open below some gap support, which is what happened to Digi International (DGII) this past week, as a slew of selling volume hit the stock hard. Notice the bear flag created earlier in the week following the big drop last Thursday. That was a telling sign, as was the pattern of lower highs and lower lows.
MACD is on a strong sell signal, and money flow just turned bearish, which tells us big money is selling this stock. RSI is oversold now, but that’s not a reason to buy the stock.
As for a target, the March lows seem right, let’s call it $46 or so, which would be a decent profit gain from current levels. Let’s put in a stop at $65 just in case.
