Bearish Bets: 3 Ailing Stocks You Should Think About Shorting This Week
These names have hit a rough patch. Here's why we believe they could fall even 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.
All the Indicators That's Fit to Short
A massive move down this past week on heavy volume has turned the chart of The New York Times Co. NYT sharply bearish from neutral. The stock had been meandering sideways for months, but looking at the indicators it was not a healthy move at all.
Notice the weakness in money flow, which have mostly been negative since the middle of summer. That is telling us big money is not buying even on the dips, and when the big drop happened this week (see the blue arrow to the right of the chart) the big money missed it — as is usual.
The company is great, they own the several properties and online services, but for now, we see more downside action even after this heavy downturn. MACD (moving average convergence/divergence) is bearish and just warming up, and the RSI (relative strength index) is straight down.
Now, we could certainly argue this chart is oversold and shorting now might be too late, but actually we believe there is more downside potential if you're willing to be patient. We'll target the $42 area and look to re-assess once price gets down there, with a stop at $55.
This is a very bearish chart and with follow-through there is nothing the bulls can do to stop it going down.
Nothing Fashionable About This Chart
Misery is the name for Capri Holdings CPRI, which is stuck in purgatory after the feds called off a merger with competitor Tapestry TPR. That name is ripping higher after posting stellar earnings, but it is the opposite case for Capri, which boasts some very nice brand names.
The problem has been execution and a lack of exciting new products, and it shows in the price chart as well. The only reason for the price rise from 2024 was the merger idea, and now that it has gone away the stock is trying to fend for itself in shark-infested waters. It is clearly not working.
The chart had been bearish coming into earnings, with some stiff resistance above (arrow). MACD is now on a sell signal, and RSI is sloping down at a sharp angle which tells us more downside is upon us.
Let's target the $15 area on an aggressive move down, and put in a stop at $25 just in case.
Allegiant Travel Has Started a Nightmare of a Trip
One of the strongest travel names of 2024 was Allegiant Travel ALGT, but as we often see it only takes a few sessions to ruin a nice long bullish run. The drop this past week was staggering and on very heavy turnover, which means the big money was heading out on vacation, perhaps permanently. Money flow just became sour, while the MACD signaled this turn might be happening by turning bearish in late January.
The 50-day moving average is approaching, and with a confirming bar (1-2 more days down) that will be a logical target at the $76 level. But we see a bit more downside here, and being patient, the 200-day moving average looks a bit sweeter at $62.50. So we'll go with a short here and target that price, putting in a stop at $100 just in case.
