Each week we identify names that look bearish and could present interesting investment opportunities on the short side.
Using technical analysis of those stocks’ charts and, where appropriate, recent actions and figures from TheStreet’s Quant Ratings, we focus on three names.
While we won’t weigh in on fundamental analysis, we hope this piece will provide investors interested in stocks on their way down a good starting point to do further homework on the names.
Yelp needs help
Yelp Inc. (YELP) was recently downgraded to C-rated Hold by TheStreet’s Quant Ratings.
The operator of an internet platform that connects consumers with local businesses failed miserably on the revenue front. That big bar downstairs was the day; the stock tracked lower and continues to race to summer lows.
There is plenty of momentum on the downside. Volume trends are bearish, while cash flow is weak. The gap is a formidable resistance, but so is the middle bar, and the cloud is red and getting bigger. You don’t need much more description here — bearish. Play a short game and drive to $22, but stop at $33 or so to be on the safe side.
HCI Group is struggling
HCI Group Inc. (HCI) was recently downgraded to Sell with a D+ rating by TheStreet’s Quant Ratings.
This chart from the property and casualty insurer shows a clear trend of lower highs and lower lows, a bearish trait. HCI tried to recover in November, but the stock has fallen back and is approaching October lows.
The cash flow expanded, but notice that the Chaikin Money Flow (CMF) is starting to falter on the downside. Also, the Relative Strength Index (RSI) bends lower on a steep slope – not a good sign. We could see a break of the triangle (yellow) within days, then a move down. Target the $27 area, stop at $42.
Delek goes downstream
Delek U.S. Holdings Inc. (DK) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The stock of the integrated downstream energy business is bouncing around here, but note that it hasn’t moved up with the market in recent weeks. That is a telling sign of weakness.
Delek hangs around the 200-day moving average and is likely to fail miserably if money pours out of the name. Volume is up and on a bearish trend, while cash flows are also negative. Note that the cloud just turned down, and a break of this bear flag could spell trouble. Target the $22 area, stop at $33.
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