Bearish Bets: Three Big Stocks, Three Big Falls
Let’s check out how household names can tumble, even ones that have proven themselves over the years.
Carrier Hits a Support Level
It is hard to get bullish about a stock that just completely falls apart when the rest of the stock market is rising. Further, if a chart shows failure to hold levels, then we can certainly expect to see lower prices ahead. Carrier ($CARR) has been horrendous this month, not only with a downtrend channel but the stock just recently broke it, landing right on the 200 day moving average.
That should be good support, and we might see a modest rally off that level, but a likely failure afterward. The moving average convergence divergence is on a sell signal, money flow is very bearish and the Relative Strength Index is weak and oversold. I can see the April lows coming into view, that would be about $54 or so, a nice 12% gain to the downside. Let’s put in a stop at $67 just in case.
Walmart Falls
After a break from its last earnings report in May, Walmart ($WMT) is moving substantially lower on heavy volume. Money flow has been telling us the big money has been selling the stock on every move, whether up or down. That is telling, and when the big money is dumping a stock do we really want to be in there? Of course not, so sellers continue to distribute Walmart.
The moving average convergence divergence is technically on a buy, but at a lower level, nothing really bullish about this indicator. RSI is bending lower at a steep angle, so this is bearish for the stock. The downtrend channel can run all the way down to the support area at $95-$100 back in October, and that might be a good place to lift a short. Let’s do that, short here at $111 or so, put in a stop at $119 and target the $99 level. Pretty bearish chart.
This Tree is Not Growing
No question that higher interest rates are like kryptonite for companies like Lending Tree ($TREE). This stock has been in a severe downtrend for months, the triangle narrowing but clearly bearish as the highs are much worse than the lows. The moving average convergence divergence is on a sell signal, relative strength is very weak and just about oversold, while the money flow just went negative.
It is hard to find a good target after a stock gets bombed like this, but a small rally to $35 is likely and then a good short play can be entered. Start small now and pile in later, targeting the $27 level.
At the time of publication, Lang had no position in any security mentioned.
