Bearish Bets: 3 High-Profile Stocks to Short This Week
These shares, pummeled on earnings, are showing bearish tendencies and charting a path downward.
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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.
DocuSign Destroys a Bullish Pattern in a Single Day
After recovering from those early April lows we saw DocuSign DOCU forge ahead on some strong volume that nearly took the stock back those February highs. But it was not to be as the stock got pummeled this past week on massive turnover (circled). We call that distribution, when a stock falls on strong volume. No question the burgeoning move created a bullish inverse head/shoulders pattern, but that has now been destroyed.
What's next for DocuSign?
Well, it appears more downside to go I'm afraid, with indicators turning bearish — like the moving average convergence/divergence (MACD) and relative strength index (RSI). The drop below the 200-day moving average is a death knell for the trend.
Let's target the low $60's area, putting in a stop at $80 just in case.
G-III Apparel Needs Some Love
After reporting poor earnings this past week we saw G-III Apparel GIII really get pounded on heavy volume. This stock was in a nice uptrend just prior to Friday's earnings but suddenly is now looking quite bearish. With the stock now sitting near the April lows the "shock" is in and we can make the assumption more downside is coming.
Let's target the $17 area and then a bit lower following that for a nice return on the short side. As always, have some protection with a stop, and buy back this short on a break of $28. This chart is extremely bearish and looks to get much worse.
Lululemon Really Dropped the Ball
Some more ugliness in retail as Lululemon LULU got absolutely smoked. The stock was recovering like the above DocuSign over the last six weeks and it appeared to be on its way, but a nasty high volume selloff just ruined those plans. That heavy distribution day Friday was indicative of professional selling, and that means more selling is likely to come in soon.
RSI is down but not quite oversold yet and the April lows are fairly close. We can target that area for starters, call it $240, but we think this stock can move to at least $220 or lower. Let's be patient and look for those targets; set a stop at $290 just in case.
