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.
Workday Is Worked Over
The provider of enterprise cloud applications recently posted strong earnings and gapped up, but given this bear market environment every move up seems to be an opportunity to sell a rip. That is what happened here with Workday, but notice we are still in lower highs and lower lows. Money flow had expanded recently but the rug pull underneath was a big drawdown from earnings.
Moving average convergence divergence (MACD) is on a sell signal and a move under the 50-day moving average will set this stock up for more down action ($154). Target the June lows around $135, put in a stop at $175.
Mohawk Industries Is Dragged Onto the Carpet
The stock of the maker of flooring products has been drilled lately. Mohawk shows a downtrend channel that is well-defined, with lower highs and lower lows. Money flow is negative as well, and MACD is on a double sell signal.
Mohawk’s Relative Strength Index (RSI) has a steep downward slope, telling us more downside is coming. We eventually could see a move to $100 or so, but first things first. A move to $105 looks like a good target, but put in a stop at $122 just in case.
NorthWestern Heads South
The electricity and natural gas provider presents a miserable downtrend here. The channel is well-defined with lower highs and lower lows and a money flow reading so negative there looks to be more downside to come.
NorthWestern’s RSI is sloping downward — that is bearish. The cloud is red, too, and volume trends of late have been quite strong and bearish. Take a ride on the short side here; target the $40 area, set up a stop at $56.