Bearish Bets: 3 Stocks You Should Consider Shorting This Week
These stocks are displaying bearish tendencies based on their technical patterns.
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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.
The Bears Are Barking at Datadog
Just a terrible reaction to a mild earnings report from Datadog DDOG has this stock headed for trouble. The big move down was on massive turnover, and while the 200-day moving average may provide a bit of support (currently floating there), make no mistake this is a very bearish chart.
Money flow is bearish while the Moving Average Convergence Divergence (MACD) is just turning down for a bearish signal. A huge gap needs to get filled down around $80 and frankly we think that is a great possibility now that many big shareholders have left the stock.
So, it may take a while but aggressively target the $81 level, and put in a stop at $122 just in case.
First Watch Restaurant Makes Us Hungry to Short the Stock
Another poor reaction to earnings, this time from First Watch Restaurant Group FWRG has this stock in big trouble. That monstrous drop this week on heavy volume really punished First Watch shareholders. The stock basically lost the three weeks of gains in just a day, and that is extremely bearish.
That is a bad sign, not to mention the pending MACD sell signal that will hit any day. The Relative Strength Index (RSI) is poor; we see some support perhaps at the $18.25 level as the stock is not even oversold yet.
Target that area, about a 10% move down. Put in a stop at $25 just in case buyers come back in, but we doubt that happens here.
Disney Is Now the House of Bear, Not the House of Mouse
Just an atrocious move down for Disney DIS as the stock had a poor reaction to good earnings. Guidance was weaker than expected here but the CEO Bob Iger said the track to profitability was positive but there will be lumpiness. That was probably the case this past quarter, but a drop on heavy volume is serious business.
We don't believe there is a buying opportunity here on Disney for some time. In fact, the 200-day moving average is not far away for a test at the $95 level.
Money flow is bearish and the MACD, which had been uber bearish already, renewed a sell signal. Clearly money is flowing out of Disney, and there is good reason to follow along this path. RSI at the top is very weak, and Disney is not even oversold yet.
We could look for that 200-day moving average level of $95.7 as a target. Put in a stop at $110 just in case, but DIS looks like it will move substantially lower.
