Trifecta Stocks is a long-only model portfolio, but we are eager to give our subscribers insight into stocks that may pose interesting investing opportunities on the short side.
Using recent actions and grades from Quant Ratings and layering on technical analysis of the charts of those stocks, we will identify up to five names each Friday that look bearish. 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.
Fidelity Suddenly Stumbles
The provider of banking, capital markets and merchant technology is a repeat offender in this feature, as it was a member late last year. Fidelity’s stock recently did a U-turn after rallying sharply in the early part of 2023. Moving average convergence divergence (MACD) has turned lower and is on a sell signal while the Relative Strength Index (RSI) is bending lower at a steep angle. That’s not a good sign and points to more downside to come.
A stock such as Fidelity should be performing as well if not better than the market, but it is not. Hence, a it’s a good short play here, looking to tag those November lows around $56. Make that the target but put in a stop at $73 to be safe.
Emerson Electric Short Circuits
This technology and engineering company has been falling hard of late, with heavy turnover and very poor relative strength. We normally see this behavior from stocks with the market in a downtrend, but clearly that is not the case.
Indeed, the RS is very poor as the stock just broke some solid support on strong volume. That means big institutional selling, and we want to look for a ride to the downside. Target the next layer of support around $79, put in a stop at $90 just in case.
Bank of Marin Struggles
This bank holding company is in a miserable downtrend, with the strong channel indicating that this is an ideal spot to add a short play. With heavy volume recently on a spike down toward $29, there is room for more down to go with the Bank of Marin.
RSI is stuck below 50, the cloud is firmly red and there is little buying pressure to be seen. Hence, a nice short chance here. Let’s target the $27 area, a nice 10% move down, but put a stop in at $32.
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