Bearish Bets: Sysco, Rogers Comm., Casella Waste on the 'Short' List
A close look at these charts reveals several names that 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.
Sysco Chart Poses Challenges for Bulls
When markets rally and a stock like Sysco SYY falters and demonstrates poor relative strength, we need to see a reason. Volume was heavy recently as the stock dropped hard through good support. That move below the 200-day was devastating to the bull trend.
So, we have a setup here for a bearish trade. Notice the Relative Strength Index bending lower (top pane) but not quite to the oversold level. We believe it'll get there with the next push lower. Money flow in the bottom pane is now bearish while the Moving Average Convergence Divergence in the next pane up is on a sell signal. If this big bar from Sept. 18 doesn't recover (with buyers stepping up) then the bears have taken over.
Let's set a target short to $70 for starters, a decently 7% gain. Put a stop in at $77 just in case.
Rogers Communications Chart Shows Trouble
We see Rogers RCIAF down sharply on volume, which typically signals big institutional selling. That is pretty common with this name -- notice the big red bars (down) from March, April and July. This is volatile stock, but the range is rather small. Nonetheless, the chart is now bearish and we could see a run down to the July lows, call it $35 or so.
Money flow is poor and the Relative Strength Index is sloping down at a steep angle, so we don't expect this stock to stop falling until it reaches an oversold status. The July low offers about a 12% move lower from current levels, a nice move in a market this is moving higher. Let's put in a stop at $41 just in case.
Casella Waste Could Be in the Dumps
A big drop on heavy volume is a sign of more selling to come, and that is probably the case for Casella Waste CWST over the next several weeks. The nice uptrend of higher highs, higher lows has now been interrupted by a nasty and bearish gap lower on heavy volume. There is no question the selling (blue arrow) indicates the big institutions are distributing the stock.
The question to ask, "Is the selling over?" We don't believe so, this doesn't finish up in a day. The stock landed on the 100-day moving average, but we don't see this holding up for much longer. In fact, the indicators have suddenly turned bearish, with money flow and the Moving Average Convergence Divergence in the second-to-bottom pane is in terrible shape.
So, a short to the 200-day moving average ($95) at least, then to better support at the $90 level. Set a stop at $108 just in case we are wrong.
At the time of publication, the Pro Portfolio had no position in any security mentioned.
