These recently downgraded names are displaying both quantitative and technical deterioration.
By BOB LANG
Stocks quotes in this article: PSTG, PEB, ATGE
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.
Pure Storage Is Purely a Short
Pure Storage Inc. (PSTG) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
The provider of data storage technology shows a wide range, with the stock quite volatile between $26 and $31. However, the indicators are on sell signals, with moving average convergence divergence (MACD) on a double sell while the Relative Strength Index (RSI) continues to make lower highs and, lower lows.
Volume trends for Pure Storage shares are extremely bearish, and while we do see support coming in around $26, that might not hold on this fourth go around. If broken, target the $23 area, but put in a stop at $29 just in case.
Pebblebrook Drops Like a Stone
Pebblebrook Hotel Trust (PEB) recently was downgraded to Sell with a D+ rating by TheStreet’s Quant Ratings.
The hotel REIT simply has fallen apart. With high-volume selling and indicators that have turned bearish, there is nothing left to do but short the name.
Money flow is bearish and RSI is bending lower at a steep angle, so that tells us how weak the stock is. The cloud is red and all indicators are flashing red. Set a target of $11, put in a stop at $15.50 just in case.
Adtalem Global Education Is Taken to School
Adtalem Global Education Inc. (ATGE) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings.
This provider of workforce educational programs is a slow mover, but the chart is still bearish. Adtalem has attacked the 200-day moving average from above, which means plenty of selling has occurred.
Money flow is weak while the MACD is still on a sell signal from early November. RSI is very weak, too, which tells us there is more downside to come. The cloud also is red, another clue of more bearishness. Let’s target the June lows around $31, put in a stop at $40.
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