Bearish Bets: 3 Stocks Crushed By Earnings to Short This Week
These shares, which are looking vulnerable, are 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.
Chipotle Is Offering Up a Meal to the Bears
What a horrible performance post earnings for Chipotle CMG this past week. After just barely coming in in-line and offering weak guidance, the stock was butchered on very heavy turnover. One might think this pounding was enough, but as we know big selling begets even more selling, so we think there is more downside to come.
That low Thursday came right near the April lows. Isn't it amazing how a franchise like this would be down some 30% in a year when indexes are higher? Well, that is the case as the indicators have now definitively turned bearish.
The moving average convergence/divergence (MACD) has a crossover sell signal and money is flowing out according to on-balance volume and Chaikin money flow.
Let's target the high $30s first for a nice 13% move down, then more from there. Put in a stop at $50 just in case.
Iridium Stock Is Falling From the Sky
There seems to be no stopping this name from moving substantially lower. The heavy volume this past week from Iridium Communications IRDM tells us the sellers have taken to the polls and are voting to cut the shares. That bar, by the way, from Thursday was the highest volume in years and it was all to the downside. You might think this blast was enough, but closing near the lows of the session is a bad sign.
Money flow just turned negative while the MACD is bearish, and on-balance volume (bottom pane) is just horrible, indicating big money is not adding shares here. Could IRDM be oversold here? Certainly so, but expect to see more shareholders abandoning the stock over time.
Let's target the April lows at $20, a nice drop from the current price. Put in a stop at $29 just in case.
Dow Breaks Support on Heavy Volume
There is nothing good about a stock building a base at the lower end of its range. That is what we saw recently from Dow Inc. DOW. The box in the top part of the chart shows the stock was rangebound but at the lower price range. That typically means eventually the stock will resolve itself lower, and that was surely the case this past week.
Dow got nailed Thursday following a weak earnings report, with the stock hitting those April lows at one point. With markets hitting all-time highs there is no excuse for this company to perform so poorly even if they are pointing towards the tariffs as an excuse.
Money flow has been atrocious — investors are fleeing the stock in droves. The Relative Strength Index (RSI) is nearly oversold while the MACD is now on a sell signal.
It is not a good story from this industrial. We see DOW making a run to $20 eventually for a nice short side profit, but put in a stop at $29 just in case.
