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.
Vir Biotechnology
Vir Biotechnology Inc. (VIR) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
This clinical stage immunology company has been bouncing around in a wide range. Volatility is high. However, the recent drop from September should worry the bulls a bit.
High-volume selling is a sign of institutional distribution, and while the shares did bounce recently from a low level, this one is not all that inspiring. Rather, we have a slew of bearish indicators associated with this stock that include bearish money flow, a poor Relative Strength Index (RSI) even though markets are near highs, and a red cloud. It all adds up to more selling to come.
Target the high $20s but put in a stop at $45.
StoneCo Ltd.
StoneCo Ltd. (STNE) recently was downgraded to Sell with a D+ rating by TheStreet's Quant Ratings.
The provider of financial technology for e-commerce has been in a death spiral for months. A downtrend channel is in place as the stock just fell off a cliff in July, making lower highs and lower lows.
The technicals could not be any worse; money flow is weak and the cloud is red. Has it rallied recently? Sure it has, but all bearish trends do rally, giving false hope to the bulls. This is another case of it.
Short with a target of $28 or so, but just in case put in a stop at $44.
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.
Want to find out the other stocks we think look good short this week and how to play them? Click here for a trial subscription to Trifecta Stocks and get "Bearish Bets" each week!
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.
