Bearish Bets: 3 Stocks to Short This Week, From Big Energy to Chinese Purgatory
A close look at the charts reveals several names that are poised for further losses, giving investors a lucrative opportunity.
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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.
1. Dycom Falling Is a Huge Disappointment
This week saw Dycom DY getting poleaxed on heavy volume, stopping the recent uptrend in its tracks. Now, we would normally wait for a bullish trend to exert itself but we are going to jump ahead here. Why is that? The heavy turnover is compelling, the big selling from Wednesday coupled with the down move in the indicators. There was simply too much pressure on the stock, and there are gaps below to fill and moving averages to test.
It all adds up to some downside, we see the $150 to $155 area coming into view. MACD is about to cross for a bear signal, RSI is turning sharply lower. Let's target $150, set a stop at $190 just in case.
2. JD.com Is Looking Quite Messy
There's no question that Chinese stocks have been in some sort of purgatory. The Shanghai and Hong Kong exchanges just can't seem to get their engines running. Every move up is met with a sharper move down. Such is the case with JD.com JD, which has been up/down more this summer than a light switch. But the heavy selling on Wednesday was quite telling (arrow), and that means heavy selling is likely to continue.
RSI is very overbought and is signaling problems for JD at the $30 level. The cloud is red and remains resistance. There are some gaps below that represent good targets down the road, but let's start with a goal of $22.50, which is about $4 lower than current prices. Put in a stop at $29.50 just in case.
3. Arch Resources' Chart Is Cooling Off
The dramatic decline of this big energy name continues. Arch Resources (formerly known as Arch Coal) ARCH once upon a time went into bankruptcy and emerged a new company with no debt but a very bad reputation. The St. Louis firm has been under extreme selling pressure over the last several weeks and is still under duress. The stock has had some big volume days to the downside, with lower highs and lower lows. That is your textbook definition of a downtrend.
The money flow is poor and the RSI is awful. Not what you expect to see when markets are rising and new all time highs! So, even though the stock has fallen sharply, there is more downside as the momentum down accelerates. We'll target the $105 area, put in a stop in at $147 just in case. Very bearish chart.
At the time of publication, Lang had no positions in any securities mentioned.
