Trifecta Stocks is a long-only model portfolio, but we are anxious to give our subscribers insight into stocks that may pose interesting investing opportunities on the short side. Using recent actions and grades from TheStreet’s Quant Ratings and layering on technical analysis of the charts of those stocks, we identify five names each Friday that look bearish.
While we will not be weighing in with fundamental analysis, 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.
Armada has fallen through the cracks, a high-volume failure at the uptrend line and now the stock is struggling. The weight is on the bulls now as the stock continues to make lower highs and lower lows. Moving Average Convergence Divergence (MACD) is on a sell signal. The 200-day moving average is not far away, and that is a good target, perhaps the August lows on a failure at the 200.
From early December, the bears have been in control of MarineMax, with some high-intensity selling. The stock is now very oversold and bouncing off the 200-day moving average, but volume levels are suspect and that is not likely to hold. The gap is still open at $15.50 and will likely close, so more down to go.
Lindsay’s long-term chart is mostly neutral but is rather suspect here, and we think it will come in and test the September lows soon. MACD is weak and the Relative Strength Index (RSI) slopes downward at a steep angle. There is nothing positive in this chart, and when the triangle breaks it should be to the downside.
Water has filled the boat here on Realogy as this stock looks ready for another leg lower. That devastating gap down in November just cannot be corrected — the buyers are simply disinterested. Resistance is everywhere, with the 50-day moving average and the 200-day moving average, above. This triangle is likely to resolve down. Short this name.
New Jersey Resources also has a bearish triangle that is likely to resolve downward. The volume and selling in December was quite intense, and the oversold nature of the stock means buyers are just not around. A break of the December lows has this one pointing to the $20s. A short here may prove nicely profitable.
This commentary was originally sent to subscribers of Trifecta Stocks on Jan. 12. Click here to learn more about this portfolio, trading ideas and market commentary product.
— Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.