Bearish Bets: Two Healthcare Plays and a Car Dealer to Short
These companies — including a major drugmaker — are seeing their shares charting a path downward.
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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.
Elevance Is in Need of Some Care
When news goes from bad to worse, it is best to stay away from a name. Such is the case for Elevance Health ELV, which just got leveled this week after suggesting its quarter was going to be a miss and leading yearly guidance lower. But we can see from the chart recently that this news should not have come as a surprise, and even though the price action on July 17 was horrible we could see even more selling hit Elevance.
The on-balance volume at the bottom is atrocious, relative strength is oversold (condition, not a signal) and that could continue on for a while. The Moving Average Convergence Divergence has been on a sell signal; you know the drill. Let's target the $260 level for a nice glide down, it may take some time. Put in a stop at $330 just in case.
Abbott Labs Cuts Through Important Support
When the stock market is performing well and a name like Abbott Labs ABT suffers a selling attack like it did this week there is no mistaking the poor relative performance and weak technical conditions. Abbott had a big move down on massive volume but remains vulnerable to lower prices. Sure, some value buyers will step in looking at this move as bargain hunting, but the trend is now down and with some follow-through that move lower could be substantial.
The triangle at the top was broken severely with the gap down Thursday on heavy volume. MACD has rolled over and the relative strength index remains challenged. It is oversold, but that condition could continue. Let's target the January lows here at $110 with the chance this stock could eventually get to $105. That break of the 200-day moving average was severe.
Lithia Motors' Chart Suffers an Outage
Horrendous week for the third largest auto dealership in the U.S. Lithia LAD surrendered strong gains earned in early summer in just three short days. The volume was massive this week on the selling, big institutions just decided to strip the stock from their portfolios. That sets up a move for this stock to drift toward the April lows, a nice 13% move to the downside.
Technicals have broken down severely as this company looks to have some real problems. MACD has rolled over and the price action is extremely bearish. Let's target the $265 area on a continuation move lower, Put in a stop at $325 just in case.
