Bearish Bets: 3 Small-Cap Stocks You Should Consider Shorting This Week

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.

Scholastic Is Not Making the Grade

Scholastic Corp. (SCHL) recently was downgraded to Hold with a C rating by TheStreet’s Quant Ratings. 

The publisher of children’s books looks to have plenty more downside to go. Since a triple top formed at the $43 level it has been straight down on higher volume. That tells us the big money is selling this stock, and frankly we can see the December lows in view.

Money flow is poor and moving average convergence divergence (MACD) is rolling over now; the cloud is red and there are plenty of reasons to trust the down move in the Relative Strength Index (RSI).

If short, target the $35 area, put in a stop at $41.

Supernus Doesn’t Look Super

Supernus Pharmaceuticals Inc. (SUPN) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings. 

The drug developer has a rough chart pattern. A nice series of higher highs and higher lows was destroyed by one massive bear swipe. Four monster down sessions on big volume wiped out months of gains, and now we are left with a very negative situation. That’s good if you want to get short here.

The recent pull-up is a good spot to enter a trade, as MACD has rolled over and the money flow is weak. Notice the peak in the Relative Strength Index (RSI) is a divergence with price action.

If short, target that $28.25 area, place a stop at $32.50.

Safehold Doesn’t Look Safe for Longs

Safehold Inc. (SAFE) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings. 

The chart of this acquirer of ground leases is ugly. It shows a downtrend in place, with lower highs and lower lows. The stock cannot get out of its own way.

Money flow has been negative for months, the MACD just crossed for another bearish signal, and the RSI is limping to the finish line. While the stock is down a ton, there seems more meat left on the bone.

Put in a stop at $50 but aggressively target the $35 area for a nice profit on the downside.

(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. )