Bearish Bets: Big-Cap Names to Short This Week
Some large-cap names are struggling to keep up with the rest of the market.
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A couple of industrial names are pointing lower while one big bank is having trouble matching its brethren.
While we will not weigh in with fundamental analysis on these issues, we will pop the hood for a look at the charts.
Let’s dig in:
Wells Fargo Not Best of Breed in Banking
There’s no question the financials have been hit hard recently, but the talk of big IPOs on the rise make these names look rather attractive. Buyers are only going to chase after the strongest names in the sector, and Wells Fargo (WFC) is not one of them. In fact, making lower highs and lower lows is the hallmark of a downtrend. That describes the Wells chart perfectly.
Money flow is poor and the RSI is starting to roll over. Support may be seen again at the $73 area where it touched a couple times lately, but that may not hold. Still, a target to $73 from current levels feels like a layup here, but let’s put in a stop at $85 just in case.
Visa Just Continues to Offer Bearish Opportunities
We profiled this name a bit ago as a good short and it was the right move. The chart and technicals are weak on Visa (V) so we look for that one more time, a bit more downside to the late March lows would be a nice profit objective. Money flow is poor, MACD has rolled over to a sell signal and not even a new high in the Dow Industrials could attract buyers into this big credit card company.
Volume levels have been high on the sell days, the on balance volume (not shown here) is pointing much lower as a result. Gaps need to be filled to the upside but pulling back after the recent strong earnings is not bullish here. Target the $295 to $290 area, put in a stop at $335 just in case.
Home Depot Remains in the Bearish Channel
Nothing good about some big retailers lately, Home Depot (HD) is the poster child of mediocrity. The stock has been plagued by sellers lately, and like Visa with the markets near highs this stock is right near 2026 lows. That is bad news and while some believe this is a stock to be bought when it is low, there is really not bottom made here yet until there is a test and success.
Money flow is poor, as big money is fleeing the stock in a big way. On balance volume (not shown) is weak and bending lower. RSI is starting to roll over here, and there is just nothing attractive about buying this stock, but let’s look for a move down to $280 or so, an aggressive 10% gain if the stock makes a move to that level. Put in a stop at $335 just in case.
