Bearish Bets: Three Stocks to Short, Including a Big Pharma
Here's why these names could fall further.
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Let's check three stocks that appear technically bearish and look ready to short.
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:
Dark Times for First Solar
With a sharp move down the past couple of weeks we have some bearish qualities still percolating in the First Solar FSLR chart. A series of lower-highs, lower-lows is the textbook definition of the trend down, and there is certainly more downside here to come if this trend continues. Money flow in the bottom pane is bearish now, Moving Average Convergence Divergence in the second-to-bottom pane is on a sell signal, while the Relative Strength Index at the top of the chart, is heading straight down.
Nothing bullish on this chart, so a short play is a good odds move. Volume trends are bearish. The 200-day moving average might serve as short-term support, but the weight is likely to pull this stock toward $175. Let's target that area on a short, but set a buy at $250 just in case.
Merck's Under the Heavy Foot of Sellers
It's been a crazy year for Merck MRK, which moved higher earlier in the year only to be shot down in late July, never able to recover those losses. The stock was obliterated on heavy turnover back then, and while there was a modest rally to just under the 200-day moving average, there really is no reason to be bullish here.
That is because a series of lower-highs, lower-lows is out textbook pattern of a bearish trend. Money flow at the bottom of the chart is now negative, RSI at the top is oversold (so there is a rally attempt, but it is not serious). A big pharma stock is not easy to short psychologically, but this has all the makings of a big move down. Let's target the $95 area, put in a stop at $116
Halozyme Chart is a Bear's Delight
Not much to get excited about here with Halozyme HALO from a bull perspective. The stock has been punished severely over the last few weeks, with lower-highs and lower-lows. Money flow is bearish, the MACD on a sell signal while the volume has been decisively bearish for weeks.
We may see the 200-day moving average come in as support, but we don't think it will hold. The pressure on the stock is heavy and simply put the sellers are in control. Let's set a target just below the 200-day moving average, at $44. That would be a nice 10% move lower from current prices, let's use a buy stop at $55 just in case.
At the time of publication, Lang had no positions in any security mentioned.
