Bearish Bets: 3 High-Profile Stocks You Should Consider Shorting This Week
These names 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.
NXP Comes Down on Heavy Volume
Quarterly results last week from big semiconductor name NXP Semiconductors NXPI was fraught with warnings. The company posted decent earnings but said orders may be slowing, and that was enough for holders of the stock to let it go. Further, the volume swelled on the selling, which tells us big institutions are dumping it.
We still see more declines here as the technicals are telling us more downside can be made. Even after after this huge move lower the Relative Strength Index (RSI) is not oversold, so don't expect a bounce. Money flow is now bearish and the Moving Average Convergence Divergence (MACD) crossed bearish.
Let's target the 200-day moving average first, around the $232 area and perhaps a bit lower to $220. Place a stop at $280 just in case.
UPS Remains Grounded
Is there a worse-looking chart than United Parcel Service UPS? The stock has been a miserable performer and for quite some time.
It's hard to believe a strong company such as this cannot seem to get it together, but the trend has been down. Remember, we pay attention to the trend and momentum to get a jump on what is going to occur. For months, the trend in UPS has been down and remains so.
MACD is on a sell signal; the recent gap lower put the stock below the channel, a crushing blow to the recovery effort in July. So, we see a move to the lower $120's to start, but put in a stop at $135 just in case.
This one may take longer to reach the target but the chart is very bearish.
Visa Is Losing Its Credibility Fast
Earnings last week from Visa V were ugly to say the least. The 200-day moving average failed to hold the stock up, which had recently been good support. The company has long been a stalwart play and is in the Dow Industrials, always reliable in up or down markets.
Check out the MACD, which is bending lower at a sharp angle — lower highs and lower lows along with a bearish crossover. Not good. Money flow is also bearish and has been all month, reflecting sentiment from the sellers. There is some good support perhaps down at the $235 level.
Let's take a shot for that target, a nice 8% gain if we achieve the objective. Put a stop in place at $270, target $235 and perhaps lower if this makes a fast run. A very bearish chart here.
