Bearish Bets: These 3 Stocks Could Cost Your Portfolio an 'Arm' and a Leg
These three names all broke hard recently, so look for more downside to come.
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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.
Factset Chart Is Not in Alignment with the Market
An ugly downtrend for Factset FDS continues to hit this stock with more sellers. The downtrend line was established in June and that led to a series of lower-highs, lower-lows -- our textbook definition of a downtrend. The worst part about this weak stock is the rest of the market is passing it up. Can it ever bounce and rise again? Sure, but at this point momentum is bearish and quite strong, until it can build a strong base the sellers are just going to hit the stock on every rise.
The Moving Average Convergence Divergence is on a sell signal, volume trends are bearish and the relative strength rolled over recently and is now in oversold territory. Ideal for a short play to initiate, let's target the $272 area and then down to $250 on this very bearish chart. Put in a stop at $330 just in case.
Arm Holdings Needs to Grow a New Limb
This high-growth semiconductor name had been moving up nicely this summer but now has suffered from severe sellingitis. Arm Holdings ARM has some "strong arm" holders to back the company but when there are sellers in the name they hit this one hard. We don't have a full-on sell signal yet, but I suspect it is coming and when it does this stock has nowhere to run, nowhere to hide.
The Moving Average Convergence Divergence is about to roll over and the relative strength has already done so. There is a bullish inverse head-and-shoulders pattern on the chart, but that is being ignored here. The price action and volume tell us the chart is bearish. So, we could target the $127 level first and then a move to test support at $120. Put in a stop at $162 just in case.
Cracker Barrel Needs A Facelift, Not a New Logo
There's the huge controversy recently surrounding a logo change for long-time restaurant favorite Cracker Barrel CBRL. Then there's the chart.
The chart shows the stock has been in trouble for weeks, with a downtrend channel in place of lower-highs, lower-lows. There is nothing bullish here and frankly an easy target to find at the April lows, that comes in around $34. That would be a nice 20% profit and likely more lower lows from there.
Seems as if casual dining is not impressed with the new logo or the same food.
The Moving Average Convergence Divergence is troubled and is firmly on a sell signal, money flow is moving in that direction, too. The relative strenght index is weak with lower-highs, lower-lows and is oversold. Let's target the easy money to $34, put in a stop a $54 just in case.
At the time of publication, Lang had no position in any security mentioned.
