Bearish Bets: Food, Retail and Medical Instrument Company Could All Be in a 'Jam'
These three names all broke hard recently and the selling is likely not over.
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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.
Abercrombie Has an Ominous Pattern
Back in May we see the huge bar from Abercrombie & Fitch ANF, when the company released earnings that seemed good, but ended up being start of a mini downtrend. As the stock tried to recover those severe losses over the last few months, it was yet another poor earnings call that dropped the stock hard this past week. A pop below the 200-day moving average is not bullish, further a pattern of lower highs, lower lows on the chart is also quite bearish.
The indicators have just started to roll over here. The Moving Average Convergence Divergence has been on a sell signal for a couple of weeks, the Relative Strength Index is making lower highs/lower lows (definition of a downtrend) while money flow is weak. Nothing here indicates that it would be time to take a call play, but a short may provide nice profits. Let's target the low $80 area and then the high $60 area for an aggressive move down, a stop at $100 would be right.
There is Nothing 'Jammin' About JM Smucker
This big consumer products company has fallen sharply in just a few sessions. Earnings clearly were the catalyst midweek, with a high-volume selloff that reached levels not seen since June. The difficult part of this chart if you're a bull is failure to sustain the trend support line, which would have been a saving grace for the uptrend, a solid rally from the low $90 area to the mid-$110 area.
All that is washed away now, big heavy selling has taken over and the indicators are bearish. The Moving Average Convergence Divergence is rolling over for a sell signal while money flow has clearly been leaking. Let's target the low $90 area, short term and eventually a move below the June lows to the mid-$80s. We'll stop out on a close above $113.
Veco Downside Move is Just Getting Started
While the bulls could certainly make a sound argument for buying Veco Instrument VECO here, we just do not see the argument holding water. Given the heavy volume selling this week and the near test of the 200-day moving average there is a strong chance this stock fails to reverse.
Money flow, while positive is starting to turn down and the MACD is crossing over for a bearish signal. No question the trend remains up with higher highs and higher lows in the chart, but there is that heavy volume bar from midweek that has us wondering if there is more downside -- we think so.
Hence, a short trade is in order. Let's target the $19 area here first and perhaps a bit lower down the road, put in a stop at $28 just in case.
