Each week Trifecta Stocks identifies names that look bearish and may present interesting investing opportunities on the short side.
Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, we zero in on five names.
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.
BRP Group Inc. (BRP) recently was downgraded to Sell with a D+ rating by TheStreet’s Quant Ratings.
The stock of this insurance distribution company has been pounded since putting in an enormous candle back in early November. Lower highs and lower lows with higher volume signals big distribution from institutions.
Moving average convergence divergence (MACD) is on a double sell signal and the Relative Strength Index (RSI) shows a steep slope downward.
There is nothing there to support this stock until we see the low $20s. Target that area, put in a stop at $32.
CarGurus Inc. (CARG) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The stock of the online automotive marketplace shows a head-and-shoulders top, which is not playing out. There is room to move down to the $28 level but that may not hold, either, with MACD still bearish and the %R stochastic still in bearish territory.
The Relative Strength Index (RSI) is always steep and bending lower, and the cloud is red.
Target the $25 area, put in a stop at $33.
This commentary is an excerpt from “5 Bearish Bets” a weekly feature sent to subscribers of Trifecta Stocks. Click here to learn more about this portfolio, trading ideas and market commentary product.
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— Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.