Bearish Bets: 3 Stocks You Should Consider Shorting This Week
A close look at the charts reveals these names 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.
Nike Can't Outrun Its Downtrend
Not even lowered expectations could help this iconic shoe/apparel retailer. Nike NKE reported earnings last week and Wall Street was not happy about it, with the stock falling hard after making up some lost ground over the previous couple of months. But that is how it works with a stock in a severe downtrend.
There is no mistaking the trend here, it is clearly bearish. The gap was nearly filled from the massive drop in June, but disappointment is in this chart. Moving Average Convergence Divergence (MACD) is about to turn bearish, the Relative Strength Index (RSI) is weak, and Chaikin money flow is poor after being in the green for some time.
The stock is now at the trend line, but we don't believe that will hold, with all of the heavy volume to the sell side. Let's target the $78 level first and then down to $72. Put in a stop at $92 just in case.
Tesla Disappoints and May Soon Pay Dearly for It
One of the more consequential names in the market is none other than Tesla TSLA, a member of the vaunted "Magnificent Seven." Elon Musk's company has been good to both the bulls and the bears, thanks to the high volatility and the response to news flow around each corner of the market. However, this latest move to the downside may guide this stock towards some lower targets.
After failing to mount a rally above the $290 resistance, Tesla stock has moved lower on big turnover. The news on October 2 of just in-line deliveries was not expected by the market, and sellers are having their way pushing the stock down. Indicators are not all that bearish yet, but a few more weak sessions will put them there.
Let's target the $220-$225 zone for a nice profit zone, and perhaps a deeper move to $185 or so might be next. Put in a stop in place, of course, at $275, just in case.
There Is No 'Joy' in This Chart
The Chinese company called JOYY YY is not finding much fun during the trading day. With a huge run higher by China stocks over the last several sessions, this one seems to be left behind.
We would acknowledge a strong uptrend pattern in place but as we see at the top of the chart this stock is not inspiring the buyers to step up to add shares. The RSI is mediocre and seems to be pushing down, while support is the long line at $34 but that is not likely hold if some selling hits these Chinese names.
Money flow is awful, bearish as can be. MACD is about to roll over here as well, so we could see YY move to the 100-day moving average where this is some good support, the $33 level. That is not much of a gain from here but more interesting targets are lower, which include $31 and ultimately $28. Let's look at a short here, with a stop in place at $40 just in case.
