These recently downgraded names are displaying both quantitative and technical deterioration.
Stocks quotes in this article:
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.
Nu Skin Enterprises
Nu Skin Enterprises Inc. (NUS) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The maker of personal care and wellness products is stuck in a miserable downtrend. It might be over, but notice the poor money flow and the tepid response to the Relative Strength Index (RSI) bottoming.
Could this stock bounce around the bottom for a bit? Sure it can, but the trend is down and we follow trends. The stock is well under all the moving averages, so there is resistance on any move back up.
Any rally here could be a good short opportunity; target the low $30s but put in a stop at $48 just in case.
Addus HomeCare Corp. (ADUS) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
This provider of home care services started rolling over in early September with some poor price action, but the high turnover started a month earlier. Money flow is bearish, we have a Moving Average Convergence Divergence (MACD) sell signal to work from and the stock is well under all the moving averages.
When the stock market is acting poorly and other names are worse, we say these names have poor relative strength. That can be seen in the top pane (RSI). These are often good stocks to short toward lower prices.
Put in a stop at $81, but let’s target the mid-$60s here.
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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