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 bearish-looking 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.
RH
RH (RH) , the former Restoration Hardware, recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
Fresh off a poor earnings report, the luxury home décor merchant continues to move lower on high turnover. RH has been punished since putting in a high last winter, and frankly the heavy selling in December was a good clue this stock would be reversing lower. Not even a 3-1 stock split announcement is helping this name.
Money flow is weak and the price action is bearish. Need I say more? The cloud is red and moving average convergence divergence (MACD) is about to cross for a sell signal.
Target the $295 area, put in a stop at $350.
Magna International
Magna International (MGA) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
While the recent move up in the stock of the automotive supplier was sharp, it was right into resistance (downtrend line). Money flow is weak and the Relative Strength Index (RSI) is bending lower, all poor qualities.
The cloud is red, the 20-day moving average has just been rejected and the March lows are in sight. We could see Magna make a run to the high $40s — that’s a good target area. Put in a stop at $66.
Textainer Group
Textainer Group Holdings (TGH) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The stock of this holding company dealing in intermodal containers is range-bound but about to get ugly. The trend line was broken the other day while MACD and money flow flashed a bearish sign. Notice the head-and-shoulders top and now the break of the neckline — not good here.
The December lows are now in play; call it $32 or so. We think the September lows around $30.60 are even a better target, but put in a stop at $38.50 just in case.