Bearish Bets: 2 Financial Services Stocks, and 1 Retail Giant You Should Short This Week
These shares are showing bearish tendencies and charting a path downward.
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Let's check three stocks that appear technically bearish and look ready to short.
While we will not weigh in with fundamental analysis on these issues, we will pop the hood for a look at the charts.
Let's dig in.
Costco Chart Shows the Stock Has More Corrective Action Ahead
While we all love Costco COST, the stock and the company, there is no doubt the chart shows this stock is in a correction. That's OK and actually a good setup for the next buying opportunity, which may just be around the corner. But for now there are some downside targets in the short term and that means a short play is in order.
Take a look at this chart here and you'll see the weakness in the indicators. No question the chart has been strong but started to get tired late in May after a run to all-time highs. The recent correction has been slow and steady. The Moving Average Convergence Divergence, as seen in the middle section of the chart, is flashing a sell signal early in June that continues today. Also, money flow is weak and on balance volume is down.
So, we look for a move to strong support, that would be around the $930 area, about a 5% move down from current levels. Put in a stop at $1,000 just in case.
PayPal Breaks Down and Has Lower Targets Ahead
After a nice rally in the Spring we see PayPal PYPL is back to its old bearish ways. The stock could not even get above the 200-day moving average recently before heading lower, and that means a new downtrend is likely in place. The latest move down is on heavier turnover, which means professional sellers are hitting the stock hard.
Money flow is just turning bearish while on balance volume is weak. MACD has turned lower, too. With markets near all-time highs an underperformer like PayPal is not a bullish contender.
Therefore, a short play is doable. Let's target the gap first at the $61 level, then loo for the mid 50's as the next objective. Put in a stop at $72 just in case.
Mastercard Takes a Big Hit to the Uptrend
This week saw heavy distribution from Mastercard MA and fellow credit card issuer Visa as these stocks were severely punished. Wednesday was the day and as the chart shows Mastercard effortlessly sliced through support. The MACD is suddenly bearish again, first time since early April. Volume trends are turning bearish as well, with a few days of distribution showing.
We could see an aggressive move lower to the support level from early April, let's call it $500. That round number is a good target, and if penetrate the April lows come into play. Let's put in a stop though at $565 just in case the bulls have other ideas.
