Yahoo Finance Zacks Investment Ideas feature highlights: Herbalife and Boeing
For Immediate Release
Chicago, IL – April 18, 2024 – Today, Zacks Investment Ideas feature highlights Herbalife HLF and Boeing BA.
Navigate Bearish Markets with This Pattern
Understanding Bearish Patterns Critical to Investment Success
Wall Street’s long and illustrious history is littered with a plethora of booms and busts. However, for most investors, bear markets and “Black Swan” events such as the COVID-19 Crash of 2020, the 2022 tech-centric bear market, or the Global Financial Crisis of 2008 tend to be the most memorable. Nevertheless, few investors take advantage of these moments because the market tends to rise in the long run (and a rising tide lifts most ships), they lack proper pattern recognition, or they look to short strong stocks.
Whether you are interested in catching a downswing or simply avoiding it, understanding the bear flag pattern is integral to surviving soft equity periods. Below are some key factors to look for:
Relative Weakness/Downtrend
Anyone who has been around Wall Street long enough has likely learned through the “school of hard knocks” that “catching a falling knife” or trying to buy low and sell high is much more difficult than it seems on the surface. The same can be said for shorting – shorting stocks in an uptrend is much more difficult than shorting stocks in a downtrend.
How Do I Know My Stock's in a Downtrend?
“My metric for everything I look at is the 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick to investing is: How do I keep from losing everything? If you use the 200-day moving average rule, then you get out.”
The simplest way to gauge whether or not your stock is in a downtrend is to leverage the 200-day moving average and look for stocks trending below it.
Anatomy of a Bear Flag
In my two decades of investing experience, I have discovered that the bear flag pattern is the most reliable bearish pattern and has a far higher hit rate than some of the mainstream bear patterns, such as a “head and shoulders” or “double top” pattern.
For the bear flag pattern, you want to look for a sharp break lower on heavy volume, followed by a weak counter-trend rally to the 50-day moving average (or 10-week MA on the weekly chart). Ideally, the stock you are looking to short has deteriorating fundamentals and/or negative news catalysts to accompany the poor price action – affording you every advantage possible. Below are two examples:
Herbalife
Meanwhile, from a fundamental perspective, HLF had seen declining earnings, legal troubles, and a worse-possible Zacks Rank #5 (Strong Sell).
Boeing
Fundamentally, BA has seen weakening sales amidst a spat of quality-control issues.
Bottom Line
It’s critical for investors to recognize bearish patterns to survive downtrending bearish markets. The bear flag pattern is simple and easy to identify, and is the most effective bearish technical pattern.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Boeing Company (BA) : Free Stock Analysis Report
Herbalife Ltd (HLF) : Free Stock Analysis Report
