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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.
Electronic Arts
Electronics Arts Inc. (EA) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
This videogame maker had earnings out Tuesday night and they were a disappointment. The chart shows a symmetrical triangle, but the indicators are not reflecting anything bullish.
Moving average convergence divergence (MACD) has rolled over to a sell signal while money flow is bearish, and recent volume trends are swelling when the stock falls. That’s distribution, and there is little to hold up EA if this falls out of the triangle.
The 200-day moving average is close, but that may not hold here; look for a move to the March lows around $128, but put in a stop at $148.
Tutor Perini
Tutor Perini Corp. (TPC) recently was downgraded to Hold with a C rating by TheStreet’s Quant Ratings.
This contractor and construction management concern has fallen sharply recently, a quick flip to bearish with heavy turnover. Money flow is very bearish and has been all month, with MACD now on a double sell signal.
Take a look at the stronger turnover as the stock falls — that’s a good sign of distribution. The 200- day moving average is just ahead, but that is not likely to hold from lower prices; we could see a test of the December lows around $13. Put in a stop at $17 just in case.
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.
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