Bearish Bets: 3 Well-Known 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.
Micron Pulls Back Below a Strong Support Point
Following strong earnings this week we saw Micron Technology MU drop sharply on some rather heavy turnover. That is a clue to what big money investors are doing — selling the stock hand over fist. While the uptrend is still intact, we need to shift at best to a neutral as more Micron holders are yet to sell.
Failing to hold the 20-day moving average is going to be a challenge; that will suddenly become very strong support. The last time MU closed under the 20-day moving average multiple days the stock continued lower, which was not long after the prior earnings report.
Therefore, we see a good short opportunity, even for a limited time. The 50-day moving average (purple) is in play and then the 100-day moving average (blue). Moving Average Convergence Divergence (MACD) is on a sell signal.
We see the $115 area as a good target, put in a stop at $148 just in case.
International Paper Is Being Ripped Apart
So much for a nice uptrend! As we like to say, when stocks move up it is like taking the escalator, on the way down it is like taking the window. Fast moves down, slow moves up.
International Paper IP had a big move lower on very heavy volume, a clue that big money was exiting the name. That can be a problem if buyers don't quickly come in and pick up the stock, which might be a challenge.
There are some moving averages that now come into play — the 50-day and 100-day moving averages are close and appear to be good targets.
Let's target those areas for a good short opportunity. MACD is now on a renewed sell signal. Let's ride the stock down toward the $38 level (100 ma), then hang on for a move to the 200-day moving average at the $36.60 spot. That would be a nice 10% gain at this objective from the current level.
The chart is not too bearish yet but Thursday's heavy sell volume is quite telling.
Trump Media Is a Volatile Mess
Trump Media & Technology DJT has been a trader's dream, but even so the trend is pointed in one direction — LOWER. Recent volume trends are bearish.
Testing the 200-day moving average last week was successful but this bounce is weak. In fact, DJT has found resistance above at the 20=day moving average, where it was rejected this week. The recent low at $25 could be a good target. Below there the April lows come into play ($22.50).
MACD (moving average convergence/divergence) remains on a sell signal and relative strength (top pane) is on a pattern of lower highs, lower lows. The stock is under immense selling pressure with high volume, therefore a short at current levels down to the low $20's should work nicely, but you've got to be fast! Further, we'll use a loose stop at $48 to give this highly volatile name room to move.
