Bearish Bets: 3 Stocks That Are in Defined Downtrends
It is difficult to hold a long position in a stock that is not keeping up with the market trend.
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These names have further to fall whether the market goes down or not.
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:
Landstar Downtrend Continues
After a nice rise in the spring, shares of Landstar (LSTR) appear to have hit a bump in the road. A series of lower highs and lower lows in the chart show this stock is firmly in a downtrend. Money flow is bearish and the MACD is now on a sell signal. Volume trends have picked up and are bearish, RSI is weak, so this stock is not at all keeping pace with the roaring market.
Therefore, a short play is in order.
There is likely good support at the March lows, call it $145, which would be a nice 17%+ gain to the downside from here. We could see some intense selling pressure here if the stock market turns down, but let’s put in a stop at $180 just in case but target the $145 areas.
Prestige Is Stuck With More Downside Targets
Prestige Consumer Healthcare (PBH) is another name that has clearly underperformed the markets recently and is in a severe downtrend. It is in a world of hurt, with a defined channel of lower highs and lower lows.
This stock peaked in early March and started a decline that does not show any signs of stopping. MACD is on a firm sell signal, money flow had been positive, but is now moving lower, and the RSI is oversold. That’s not a reason to buy but if it continues, then it’s another reason to short more of this stock.
We’ll target the $40 area first. That is long-term support and if it breaks or just pulls back up we would consider further shorting the shares. Put in a stop at $53 just in case.
Gaps Lower Are Tough to Fight
Manulife (MFC) fell sharply this past week on very heavy volume. This indicates the bears have taken control, and while the move has not been confirmed with a follow-through day yet, we believe that is coming up next.
RSI plunged on Thursday and the stock is not yet oversold, while money flow is bearish and the MACD is rolling over for a sell signal.
There could be some support at the 100-day and 50-day moving averages (blue and green), but those levels are not likely to stop an avalanche of sellers. There is a gap open lower that needs to get filled, let’s call it $35, but ultimately we see a move down to $34 and then the $33 level for a potential gain of about 12% on this short.
Put in a stop at $39.50 just in case.
