Each week we identify names that look bearish and may present attractive investment opportunities on the short side.
Using technical analysis of these stocks’ charts and, where available, recent stocks and ratings from TheStreet’s Quant Ratings, we focus on three names.
While we’re not going to weigh in on fundamental analysis, we hope this article gives investors interested in falling stocks a good starting point to do some additional research on the names.
Bath & Body Works Gets Worked Out
Bath & Body Works Inc. (BBWI) was recently downgraded to Sell with a D rating by TheStreet’s Quant Ratings.
Since late 2021, the retailer specializing in home fragrances and body care products has been on a steady decline, a symptom of changing consumer tastes and squeezed margins. These are fundamental reasons; the chart shows this to be the technical case as well, with a series of lower highs and lower lows. Bath & Body Works stock fell significantly below support last month and attempted to rally, but to no avail.
The money flow is bearish and the Relative Strength Index (RSI) is falling on a steep slope, which tells us that there is probably more downside here.
Stop at $42 and go down this one to mid-$20.
Myriad Genetics does not pass the test
Myriad Genetics Inc. (MYGN) was recently downgraded to Sell with a D+ rating by Quant Ratings of TheStreet.
The developer of genetic tests has been sanctioned lately. The big days of sales took place at the end of May and buyers have been absent since. This means little interest here, and it leads to lower prices ahead. The money flow has been weak and turned bearish, while the cloud is red.
There is a definite trend channel in place, and even a modest rally would be the time to short more stocks. The Moving Average Convergence Divergence (MACD) has also reversed.
If short here, stop at $21 and go down Myriad to $11.
Hanesbrands is not doing well
Hanesbrands Inc. (HBI) was recently downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The underwear and other apparel maker was bored early on in the year. Hanesbrands has a pattern of lower highs and lower lows with very weak money flow and repeated sell signals on the moving average convergence divergence (MACD). There’s just no buying here; every rally attempt has encountered sellers.
The cloud is red, volume trends are bearish and sellers started to pick up the pace in May. This means more inconvenience.
Look to bring this stock back to the $7 zone, stop at $13.50 just in case.
(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.)
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