Bearish Bets: A Chip Giant and 2 Other Stocks You Should Think About Shorting

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.

Taiwan Semiconductor Sags

Taiwan Semiconductor Manufacturing Co. (TSM) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings. 

The big Taiwanese chipmaker has seen better days. The stock was well over $100 earlier this year. But with the slide in tech stocks and a softening of demand, Taiwan Semi remains a stock being sold by big institutions.

The chart shows lower highs and lower lows amid the selling. The recent pull-up toward the 50-day moving average is simply a bear flag. Money flow is nonexistent, and there could be a big whack coming toward the October lows — all bearish here. If short, target the $50 area, but put in a stop at $75 just in case. The Relative Strength Index (RSI) has plenty of downside in the tank.

Allegiant Travel Loses Altitude

Allegiant Travel Co. (ALGT) recently was downgraded to Sell with a D rating by TheStreet’s Quant Ratings. 

The airline is a repeat offender and has shown lower highs and lower lows for months. From the highs around $175 or so back in the spring, this stock is a disaster in motion.

The cloud remains strong and pointed lower. The recent pull-up higher is a bear flag and a run up into resistance. There is no reason to buy the stock here, but a short opportunity is at hand. If short, target the $60 area, put in a stop at $85.

Edwards Lifesciences Isn’t Lively

Edwards Lifesciences Corp. (EW) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings. 

The producer of critical care and surgical monitoring equipment got slammed earlier this month on some big volume and has barely budged. This tells us buyers are not getting into the name and a high probability of another leg down exists.

Money flow is negative and moving average convergence divergence (MACD) has crossed over for a sell signal. RSI is flat on its back, with oversold readings (they can stay that way for a long time). Use this recent strength to add a short play. Target the $62 area, put in a stock at $78.