Bearish Bets: 3 Stocks You Should Think About Shorting This Week
Here's why we believe these quantum computing, insurance and automobile technology names 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.
IonQ Is a Volatile Name With Some Downside Potential
Lately all the rage has been about quantum computing, and IonQ IONQ is one of the names people are talking about. The stock had been on a tear since September, rising from $7.50 up to $54 just this past week! But the air was let out of the stock as Nvidia NVDA CEO Jensen Huang threw a bit of cold water on the group, which caused the hot money to exit. While IONQ suffered the consequences of those words it only lost a portion of those recent gains.
Still, the big volume bars and the switch to a bearish trend in one day is notable. This stock can deliver some pain very quickly to the bulls, but if you're short you'll want to be patient and disciplined (if you hit your stop, you get out — period!).
Moving average convergence/divergence (MACD) is on a sell signal, money flow is poor and has been heading down for weeks. That heavy volume bar from Jan. 8 is very telling, so we think more downside towards the 200-day moving average is likely.
Target the $20 area, and put in a stop at $38 just in case.
Allstate Is Suffering From Fires in the West
The deadly and devastating wildfires in Southern California bring a realization of how dangerous weather can affect our living and home situation. Heavy winds have spread across the Southland bringing with it fiery conditions that seem to bring no end to the destruction. Hundreds of buildings and homes have been destroyed in its wake.
Allstate ALL is right in the middle of this too. They underwrite policies in this part of the country. The stock took a major hit this week but it has been moving lower since the start of December.
A channel of lower highs, lower lows is our textbook definition of a downtrend. Money flow is bearish and the relative strength index (RSI) has descended at a steep angle; that is bearish. The heavy volume bars tell us big money is exiting the name, so we see a move to short still in play. The stock has just tagged the 200-day moving average and bounced, but with more bad news likely that support won't hold.
Let's set a target of $170, about 10% lower from current levels and where we might find some support. Put in a stop at $195 just in case.
Mobileye Global Just Lost Key Support
With only a two-day move down Mobileye MBLY has completely destroyed its uptrend pattern. Remember the old saying, "Going up is like taking the escalator, going down is like taking the window."
MACD is now on a sell signal, but look at the recent volume trends — uber bearish. The selling has accelerated and there is no question this bearish trend is likely to continue.
The 200-day moving average was lost this past week and while we would like to see some follow-through to the downside, there are some good targets lower. First up, the $13.50 area looks to be a good target where buyers stepped in following a drop in October.
Let's target that area here at $13.50 for an attractive profit objective, and afterwards we'll figure out if we need to set a lower target. Put in a stop at $18.75 just in case.
