Bearish Bets: A 'Short' Start to the New Year
These high-profile names finished the year weaker and look to have more downside.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Let's check three well-known stocks, some of which make products you've probably bought -- or have eaten -- recently. Each one appears technically bearish and ready to short.
Let's dig in:
Honeywell Looks to Make Another Leg Down
That gap down in July for Honeywell (HON) just after earnings was massive and bearish for the stock. Since then a series of lower- highs and lower-lows in the stock fits our definition of a solid downtrend. No question the chart is bearish. You can see a budding sell signal on the Moving Average Convergence Divergence and already a bearish reading in the chaikin money flow, as seen at the bottom of the chart.
Will the gap from April hold the stock from going down? Possibly, but that is still some ways down, we expect to see this trend down continue into the new year. Let's target the gap, roughly $185 and possibly a bit lower, put in a stop at $202.50 just in case.
The 'MO' is Clearly to the Downside
Just an ugly chart on Altria (MO) , which shows a huge gap down and a poor effort to rise following that drop. In fact, a bearish flag has developed and while it is a longer duration than normal, the stock remains well below good resistance. The current 200-day moving average at $60 is in the way for a bullish move, and this stock is likely to make another leg lower in the coming days. A short position will capture that move down.
Money flow is poor and the relative strength index is simply not responding to the stock moving up, probably some short covering here as the stock looks "cheap." We know better though, and a move down is imminent. Let's target the support at $53+ for a nice 8.5% move down, put in a stop at $61 just in case.
No Pizza Party for the Domino's Bulls
This Domino's Pizza (DPZ) chart is a real mess. It appears more downside is ahead. We also see lower-highs and lower-lows, while the MACD is now on a sell signal. Money flow is awful while the stock continues to miss opportunities at moving up. This is in the fast food sector, a group that is in its own bear market (most names, that is).
Let's target the recent lows in November around the $385 level, and if that is breached there is more downside to the $300 area but that might take some time. Stop yourself out at the $450 level, we'll know this is wrong if that resistance is taken out.
At the time of publication, Lang had no position in any security mentioned.
