3 Bearish Setups Traders Can’t Ignore Right Now
These stocks have been hit hard of late and more downside is likely.
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Let's check out three stocks that appear technically bearish and 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:
Estee Lauder Breaks a Nice Uptrend
This earnings season is turning out to be a spoiler. In fact, companies like Estee Lauder (EL) that posted strong earnings are getting slammed the day or two after. Such is life when your stock is hot and it is time to hit the confessional (earnings).
EL was in a nice uptrend but the heavy turnover following earnings this past week tells us that move up may now be over, and reversed to the downside.
Indicators are mostly bearish or turning that way. MACD (moving average convergence divergence) on a sell signal is an early sign of weakness, RSI (Relative Strength Index) dropped like a stone and is oversold, but that is no reason to get long.
There is room down to the mid-$60's eventually if there is good follow-through to the downside. Let's first target $88, the 200-day moving average, then we'll see if it walks down further. Put a stop in at $110 just in case.
Steris Breaks the Uptrend on Heavy Turnover
A sharp decline on heavy volume on several occasions plagues the chart of Steris (STE) . This stock is really challenged here, with weakness in most of the indicators.
MACD and RSI are firmly on sell signals, while the money flow remains positive but that won't be for much longer.
Some good support is far lower than current prices, and all that is needed is some confirmation (lower) to satisfy a requirement.
Let's target $220 on an approximate 10% move down then a more aggressive target being $205, the April 2025 lows. Put a stop in at $260 just in case.
WEX Is About to Roll Over
WEX (WEX) has a nice bearish setup that has not broken as of yet, but looks likely to happen within days. Heavy selling for days but not much heavy price action, although that delay could be ending with a larger down day that looks imminent.
The chart and indicators are clearly bearish; the MACD is on its second straight sell signal, and RSI is steep in its descent and seems to be signaling more downside.
We could target the November lows at $135 first, and then look for more downside as the gap at $125 looks to get filled. The heavy volume bar is the clue to the bearishness. Put in a stop at $165 just in case.
This is a really bearish chart here.
