Bearish Bets: 3 Stocks You Should Think About 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
Monster Beverage Shows a Monster Decline
It's tough being the the one stock in a group that cannot keep pace with the rest, let alone the market. Monster Beverage MNST certainly shows the pain its investors are suffering by owning the stock.
Since the start of the year Monster is down more than 10% and recently suffered a devastating blow on high turnover. That means trouble, as big institutions are selling and while the decline so far has been steep, there seems to be more downside yet to play out.
Moving Average Convergnce Divergence (MACD) is on a sell signal, the cloud is red and recent volume trends are strong and bearish. This stock could easily move down into the high $30's, so let's target that area ($38), and put in a stop at $54 just in case.
Celsius Holdings Is in the House of Pain
What a miserable summer it's been for this very popular energy drink brand. Celsius Holdings CELH has fallen sharply but we can understand why from a technical point of view.
There was an ominous double top created in March and May that rejected price above the $95 level. It is bad when it happens once, but twice is treacherous. As a result, a bearish "M" pattern was created and continues to play out.
The recent pullback on heavy volume indicates the big money is exiting the name. If that is true, more downside is to come.
There is nothing bullish on this chart. Money flow is now negative, MACD is on a sell signal and this week the stock fell below the 200-day moving average. That's all bearish in our book, hence a move down is very much in play.
Target the February lows at $48-50 for a nice 15% win from current levels. Put in a stop at $72 just in case.
Roku Has a Bad Case of the Yips
Roku ROKU just can't seem to find any momentum to attract buyers. Each time it seems the stock is ready to make a move, the sellers knock it right back down.
Eventually we can see this stock moving with other tech names, but not right now. In fact, each rejection (once this week, twice in May) is confirmation that big money is not interested in getting long. Could the stock be building a base? It's possible, but at this point it is hard to trust any move higher that is not confirmed with follow-through.
Money flow is uber bearish here and the MACD is just moving sideways. There is no positive momentum at all, and while much of the excess has been squeezed here, note the stock has not moved well as the rest of the market moves up. That is very poor relative strength, and if the market corrects this one will get hit hard, too.
Target the $45 level, but put in a stop at $67 just in case.
