Bearish Bets: 3 Stocks You Clearly Should Think About Shorting This Week
These names are displaying technical deterioration and present opportunities for short plays.
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Welcome to another edition of 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.
Live Nation Suddenly Isn't So Lively
What a horrendous day last week for Live Nation Entertainment LYV, which is now the target of an antitrust lawsuit by the US government. That news on Tuesday was met with heavy selling, and frankly it does not appear to be over. The one-day drop wiped out six weeks of gains in one fell swoop. Remember, going up is like taking the escalator, going down is much faster, like taking the window.
The stock of the live entertainment giant was punished last week on crazy big volume. Also, the indicators have now turned sharply bearish, and while the 200-day moving average looms as support the heavy turnover last Tuesday could be just the start. We could see a move down to the October lows, and that is a steep drop. Who wants to be long this name with a cloud hanging overhead? We will short it instead. Target the $78 area, put in a stop at $98 just in case.
Our Intel Identifies Palantir as a Short
We have identified a few bearish patterns here on the chart of Palantir Technologies PLTR that seem to signal this stock has more room to fall. Let's start with the trusty head-and-shoulders pattern, traced out here along with the neckline. That line did not hold and the stock is extremely weak. We also see a bearish wedge pattern developing that was breached to the downside last week, with lower highs and lower lows fitting our textbook definition of a downtrend.
Indicators for the developer of software platforms for the intelligence community are poor and leaning bearish. Volume trends are also to the bearish side while moving average convergence divergence (MACD) is firmly on a sell signal. Let's target a short play to the 200-day moving average around $18.50 or so for a nice downside profit (15%) and perhaps more. However, put in a stop at $25 just in case.
Logitech Makes for a Logical Bearish Play
Logitech International LOGI has come down sharply over the last several sessions. In mid-March the stock made what appears to be a double top, just about matching the highs from January. As we know, stocks with double tops have some bearish baggage to carry with them, and Logitech is no exception. A series of lower highs and lower lows is a textbook bearish trend. The stock appears to have stopped right on the 200-day moving average, but as we see from the volume bars lately (arrow) there is no sign of relief.
We see more downside here for the maker of computer and gaming peripherals even after the strong move lower. There is a huge gap begging to be filled at $68, which makes us think Logitech is a short play. We will be patient and target that area, but put in a stop at $90 just in case.
