Bearish Bets: Three Stocks to Short This Week
These three stocks just can't keep it together, and are likely to slip lower.
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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.
Advance Auto Parts Needs Some Engine Work
A massive drop on heavy volume in Advance Auto Parts AAP was had bulls checking their airbags and seat belts. The stock chart shows a massive bearish head/shoulders pattern created, where the right shoulder at $46 was broken and then the neckline at $40 was skidding like tires on ice. While the drop was big, there is significantly more downside action to come, especially after the October lows are penetrated.
The Moving Average Convergence Divergence indicator rolled over in early February while the money flow is back to bearish. The Relative Strength Index (top pane) is bending lower at a steep angle, lower highs in this indicator. This shows the stock knee deep in a downtrend. We see a move to the low $30s coming up soon, let's target that area, but place a stop at $44 just in case.
Steven Madden Is Going 'Bear' Foot
This fancy footwear retailer was once a high flying stock, then it went cold for some time and bounced back strong. Now Steven Madden SHOO is in a miserable downtrend, with lower-highs and lower-lows. That is the definition of stock moving down. Check out money flow, which is uber bearish. RSI shows that $50 level is difficult to penetrate. The cloud is red, and the high volume move this week says big money is exiting the stock quickly.
Hence, we see more downside before SHOO makes a recovery. Let's target the high $20 area, but realizing that won't be the end to the slide. Put in a stop at $40 just in case. A very bearish chart here.
United Therapeutics Is Falling Apart
A monster down session for United Therapeutics UTHR this week has this company on the defensive. The stock had a huge volume day to the downside Wednesday, breaking a widening wedge pattern (drawn in) and finishing in the lower end of the range. The drop on heavy volume is the big money holders simply calling it quits and selling the stock. That often leads to lower prices, and we'll take advantage of it.
Money flow is still in the red, and check out that big drop in RSI (top pane). That trajectory tells us more downside is in store, the MACD has also rolled over. Bad news all around but good news for short sellers. Let's target $290 area for starters and ultimately down to $250. Put in a a stop at $335 just in case, we'll give it plenty of room.
At the time of publication, Lang had no position in any securities mentioned.
