Each week we identify 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 three 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.
Dollar General Takes a Tumble
Dollar General Corp. (DG) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
This retailer has fallen on hard times of late. Since posting horrendous earnings on June 1 the sellers have taken control of the stock. Dollar General has everything working against it: poor price action, elevated volume, bearish indicators and put option buyers galore. Then there’s the money flow at the bottom of the chart, which shows an exodus of capital.
Now is a smart time to add a short position, especially with a deep oversold reading. That may scare some, but even at this deep level there is likely more selling to go. Set an aggressive target of $140, but put in a stop at 170 just in case. This stock has plenty more room to go lower.
Capri Disappoints Again
Capri Holdings Limited (CPRI) recently was downgraded to Hold with a C rating by TheStreet’s Quant Ratings.
Retail is just difficult to navigate. Given that, Capri has disappointed so many times. The stock of the fashion apparel seller has been buried since breaking down in February, with lower highs and lower lows and a defined downtrend channel. The money flow tells the story — it’s an exodus.
Investors are fleeing the stock as quickly as possible, which presents a good short opportunity. The top of the channel is not far off at the $38.90 area as the stock tried to rebound recently from an oversold condition. But if lower highs hold this should be an excellent spot to short. Target the $30 level, put in a stop at $44 just in case.
Columbia Sportwear Doesn’t Look Sporty
Columbia Sportswear Co. (COLM) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The apparel maker is a repeat offender on our list of bearish charts. Columbia Sportswear had a miserable month of May but is trying to bounce back this month. However, volume trends are telling a different story; remember that volume is like a lie detector test — you cannot fool it.
Money flow is horrific while the stock is well below the 200-day moving average, and if it touches it soon (call it $81) then we could see a large move down. Let’s add a short play here and target the November lows at $71. That would be a nice 10% gain on a short, but place a stop at $84 just in case.