Bearish Bets: 3 Nosediving Stocks You Should Short This Week
These names all experienced big drops on earnings — and the selling is likely not over.
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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.
This Chart Needs a Re-Alignment
Align Technology (ALGN) just got smashed this past week on heavy volume. The big gap left a hole in the chart the size of the Grand Canyon. Sellers just threw in the towel on the downside surprise earnings, and there could be much more downside to go before it is over. Selling is hardly ever finished on the first day, and that means lower targets ahead.
Money flow is weak and on-balance volume is reflecting distribution now. Moving average convergence/divergence (MACD) is on a sell signal. Just all bearish here.
Let's put a short on and target the $105 area; the stock could eventually make a run to $97. Put a stop in at $150 just in case.
Confluent Gets Hammered as the Bears Take Over
What an ugly session Thursday for Confluent CFLT as the stock just nosedives into new lows. The stock has only been trading since 2021 but this latest move shot a hole into the recent uptrend. The wipeout move this week was on heavy volume, again another sign this trend is shifting bearish.
We can see the weakness in the indicators, MACD has turned for a bearish signal, while on-balance volume has fallen off a cliff. Money flow just turned bearish too. This stock has more room to go down before buyers find interest.
Let's target the $12 area, and put in a stop at $21 just in case.
This ARM Is Clearly Broken
With some really nice earnings this past week and solid chart action it was a bit surprising to see weakness on such big selling volume from ARM Holdings ARM. After all, the stock had been on a roll since bottoming in April. A series of higher highs, higher lows intact, is our textbook definition of an uptrend. But what goes up often goes down and that means ARM is in some trouble here.
The heavy turnover following a miss on earnings tells us more sellers lurk. Money flow had been bearish coming into the month and remains so; MACD is now turning to a bearish signal. Certainly this stock can be rehabilitated with a few up sessions and would no longer be bearish, but that would be like moving mountains right now. The easier path is probably some downside targets.
Let's see if the stock can make a run to $130 and then $118 before it turns up. Let's put in a stop at $155 just in case.
