Bearish Bets: 3 Stocks Investors Should Think About Shorting This Week
Here's why these names could fall further.
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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.
Target Misses the Mark One More Time
An atrocious earnings report this past week from Target TGT has investors worried about this company's future. It's not bad enough they miss earnings and guidance, but Walmart WMT seems to be eating into their market share. Walmart stock hit new highs last week. In any event, the high volume selling that occurred after earnings is a signal Target stock has more downside.
Thursday the price action was poor with markets higher, a follow-through day to the downside, which is a classic "tell" on the trend of a stock. In this case, down.
Money flow is awful, and the RSI (relative strength index) is oversold so this might bounce, but it is not worthy of getting long. In fact, we see targets lower, perhaps to the $105 area. Let's set that as our objective, and put in a stop at $135 just in case.
Nothing but Maximum Pain for Maximus
This is a new name but the same old chart story. The stock of Maximus MMS has just been hammered recently. The big drop mid-month was on heavy turnover, and that means the big institutions were selling and simply stepping aside. When a downtrend is just getting started the big money gets out of the way FAST. We see this evident with weak money flow, too.
MACD (moving average convergence/divergence) is on a sell signal crossover from last week (circled), and while the RSI at the top is oversold. That is clearly no reason to get long the stock. In fact, we could see a feeble bounce that is even a better spot to short the stock.
Let's target some lower levels, the $60 area is of interest from prior support. We'll put in a stop at $80 just in case, but if the stock does rally some above current levels that would be another reason to short more shares.
Warner Music Group Is Singing a Bearish Tune
It is said that "nothing good happens below the 200-day moving average." Warner Music Group WMG pushed down to that level this week and did bounce but it was weak. Most of the secondary indicators are turning bearish, and that is going to be a problem for the bulls.
We see the stock had a big range this past week, and it is likely to come back down for a visit to see if buyers are interested in the shares at lower prices. If not, we see a move to the $27 area, where the August lows were established.
While money flow is still green, we don't see that lasting too much longer. Volume trends are now bearish; a close below that 200-day moving average would cement the trend as bearish, and a very good short play opportunity.
Target the $27 area, and put in a stop at $35 just in case.
