Bearish Bets: 3 Stocks Still Trapped in the Bears’ Grip
Welcome to another edition of TheStreet Pro’s Bearish Bets, our weekly feature where we identify three stocks that look bearish from a technical perspective and may present interesting investing opportunities on the short side.
While we will not be weighing in with fundamental analysis on these issues, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names contained herein.
Fortinet Gets Buried Under an Avalanche of Sellers
Just a miserable couple of days for Fortinet ($FTNT). The stock was beaten up on Wednesday then after earnings hit that night was bludgeoned on ripping volume. This stock is now in the doghouse, and while cybersecurity names are still in vogue this one will need to take its medicine.
Notice the oversold RSI, but that is no reason to buy and the money flow is turning bearish. MACD was on a sell signal several days ago, so this entire move lower makes sense. Fortinet may have found short-term support at the 200-day moving average but that should fail to hold.
Let’s take an aggressive stance and target the big gap around $90. It might take awhile but it’s a nice profit objective. Put in a stop at $145 just in case.
Service Corp Chart Is Laid to Rest
A very tough move downward for funeral home name Service Corp. International ($SCI) as the bears came in for a feast and continue to take bites. Prior to the disastrous move Thursday (10/29) on big volume the stock was not trending much.
Lower highs, higher lows is our definition of no trend, but now with the huge gap down under recent higher lows that shifts gears to a full-on downtrend. Money flow is weak and the MACD is now on a sell signal.
Notice the volume moves over the last month or so. Heavy red bars tell us the stock has been under distribution (big money sellers) for weeks. It was only a matter of time that a breakdown would occur.
We see more opportunity for downside here, yes…even after the collapse this past week. Let’s target the $68 level, it might take awhile, and eventually down to $60. Put in a stop at $79.
Alnylam Chart Remains Bearish
Nothing like a double gap down over a few months to get you even more bearish. Alnylam Pharmaceuticals ($ALNY) got pasted in July on heavy selling, tried to make a recovery and was smashed again this past week.
You don’t need to keep beating you head against the wall to understand when a stock is not in condition to be bought. Even as the stock tried to recover in late fall, the 100-day moving average (green) was determined to stop any rally, and it did that in short order.
RSI is now oversold, again not a reason to buy, while the MACD is turning to a sell signal. Money flow has been bearish for weeks. There’s just nothing good here for the bulls but maybe a feast for the bears.
Let’s target the $160 level and if there is another gap down the $150 area is a good target. Put in a stop at $198 just in case.
