Bearish Bets: 3 Well-Known Stocks You Should Consider 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.
Starbucks' Chart Is in Need of a Jolt
For Starbucks' SBUX chart we are panning out to a weekly version. The stock was hit so hard on May 1 that we needed to see where some support may be, and that goes all the way back to 2022.
That low comes in around the $64 level, just before the return of founder Howard Shultz. He is no longer operating the company, and the stock certainly reflects the worries over the economy, inflation, higher wages and more costly inputs.
Following the lead of the big red bar printed this week it appears to the patient short player this has more downside to the 2022 lows or even beyond that point. Money flow is bearish and the Moving Average Convergence Divergence (MACD) has been on a sell signal since mid-February.
Targeting the $62 area, put in a stop at $83 just in case.
CVS Crashes Into Area Last Seen in 2020
It's not often we see a stock today that makes a four-year low but that is what we had this week in big drugstore name CVS Health CVS.
The stock was punished this past week after missing badly on earnings. This had to be the worst day for trade in this name in years, and the high-volume selling really told the story.
The chart is atrocious, as we back into viewing this weekly chart. Notice the series of lower highs, lower lows on the chart; CVS is 40% below the highs in 2022. That is a steep decline, and it is going to be tough to recover all of that lost ground.
MACD is on a sell signal, the Relative Strength Index (RSI) is pretty well oversold so there could be a rally off this current level, but we see more downside here as the selling pressure is going to become intense.
Set a target to the $45 level, which is the late 2019 low, put in a stop at $70 just in case.
Skyworks Solutions Is Not in a Good Spot
We can see the downtrend on this long-term weekly chart of Skyworks Solutions SWKS. Simply a textbook case of lower highs and lower lows, this past week, however, cemented that trend and really pushed the stock downward, nearly tagging the October 2022 lows.
We are seeing more and more of these former hot names getting punished, and with it some attractive downside action.
Now, one might think that after such a massive drop there just could not be any sellers left. That would be wrong. In fact there is some good potential to tag the $85 area and then below there October lows of $72.
Let's target that zone but give the trade some time, put a stop in at $101 just in case.
At the time of publication, Lang had no positions in any securities mentioned.
