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.
Darden Restaurants ( DRI) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
Darden recently fell sharply on some pretty heavy turnover, but has recovered a bit. This recent rally is not all that impressive, though, and the stock could not get above the descending 50-day moving average, which is no solid resistance.
Money flow is weak and the Relative Strength Index (RSI) has stalled out here. There is little to like about this chart other than it’s likely to retest those March lows rather soon.
That level is $115, and a good target area, but let’s put in a stop at $142 just in case.
Bausch Health ( BHC) recently was downgraded to Sell with a D+ rating by TheStreet’s Quant Ratings.
This stocks is clearly in a downtrend with lower highs and lower lows. Money flow, while green has been declining while the volume trends are abysmal.
RSI has hit some resistance here and with the lower highs in the price chart that is a negative divergence. We could see a move here into the teens before too long, but to be safe let’s put in a stop at $25 and target the $16.50 area.
Colgate-Palmolive ( CL) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
Colgate is one of those staple names with products in all of our houses. But the chart of the company’s stock shows weakness, perhaps reflecting the higher prices in the economy being an issue. Whatever the reason, the stock is in a violent downtrend and has fallen off sharply in 2022.
The recent pull-up in price is an excellent spot to start a short position; money flow is weak and the cloud is red.
Let’s target the $70 area, put in a stop at $78.
(Real Money contributor Bob Lang is co-portfolio manager of TheStreet’s Action Alerts PLUS. Want to be alerted before AAP buys or sells stocks? Learn more now. )