Bearish Bets: 3 Former High-Flying Stocks You Should Consider Shorting This Week
Here's why these names could fall further, including an ideal setup for a bearish play.
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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:
The Mighty Lilly Looks Vulnerable to More Downside
The law of large numbers has finally caught up with Eli Lilly LLY. The stock was pounded mercilessly on Wednesday with massive turnover to boot. That puts this stock in the penalty box, but first we have some downside targets to deal with.
Though Lilly did close above the 200-day moving average, that is simply a reflex and short covering. The stock simply filled the gap from August and now is stuck below several moving averages.
The Moving Average Convergence Divergence (MACD) has turned down while relative strength (top pane) is in reverse. There is no reason to hold or buy Lilly here yet, but a short play is very playable.
Let's target the support area way down at $750, though it might take some time to get there. Put in a stop at $875 just in case.
Wingstop Has More Than Just a Broken Wing
One of the better performing stocks in 2023 was Wingstop WING, the very popular fast food wing restaurant. But this year, following a nice surge in the spring, the stock had been moving sideways for a few months. Even a bearish double top was on display (June and September) at the price of $434.
WING headed down to the 200-day moving average this past week where many big investors thought the price would be defended, but it did not happen and the stock was bludgeoned this past Wednesday on massive turnover. Money flow is bearish still while relative strength is down and oversold.
Wingstop could see an oversold bounce but it won't likely make any progress, so even a short here requires some patience and steady hands. Let's target the January 2024 lows on the left side of the chart, around $270, and then lower from there. Put in a stop at $320 just in case.
AnaptysBio Breaks Support and Sees Lower Prices
We could certainly make a case for buying a pullback, but a huge move down like we saw in AnaptysBio ANAB is one you stay away from. In fact, this may be the ideal setup for a bearish play, as we look for lower prices over the coming days.
Why should there be more downside? The evidence is clear: money flow is bearish and that Wednesday session was jarring. The stock simply could not get out of its own way, with heavy selling and volume all session long. The channel drawn in of lower highs, lower lows (bearish) was broken definitively to the downside, so there's just nothing to interest a buyer.
Still, a short play is very doable. Let's target the April lows at the $18 level, and put a stop in at $25 just in case.
