(04/29/16) Seasonal Shorts

In selecting new short trade ideas, our screens looked for negative revenue and earnings trends, explains seasonal trading expert Jeffrey Hirsch, editor of The Stock Trader’s Almanac.

We focused on sectors that enter seasonally weak periods in the month of May.

Invesco (IVZ) is a publicly-owned financial investment manager. The market’ struggles over the past year and a half or so have translated directly to declines in revenue and earnings.

IVZ has missed earnings estimates for the last two quarters. IVZ could be shorted near projected monthly pivot point resistance at $32.55 or a breakdown below support at $29.77 with confirming negative stochastic, MACD, and relative strength indications. If shorted, set an initial stop loss 8% above the entry price.

Knight Transportation (KNX) is a trucking company doing business primarily in the US. Sluggish growth, here and abroad, is tempering demand for freight and associated services. KNX did miss revenue and earnings estimates for the most recent quarter and EPS estimates for the rest of the year are falling.

KNX could be shorted near resistance around $27.58 or on a breakdown below support at $24.24 with confirming negative stochastic, MACD, and relative strength indications. If shorted, set an initial stop loss 8% above the entry price.

Methanex (MEOH) produces and supplies methanol globally. Revenue and earnings have been falling faster than analysts’ estimates. Earnings have missed for four straight quarters.

Production has also been hindered in some areas by a lack of raw materials. MEOH could be shorted near resistance at $36.35 or on a breakdown below $29.28 with confirming negative stochastic, MACD, and relative strength indications. If shorted, set an initial stop loss 8% above the entry price.

Virtus Investment Partners (VRTS) is another publicly traded investment manager that has struggled with the investment landscape over the past year plus. Revenue and earnings are forecast to decline this quarter and beyond.

VRTS could be shorted near resistance at $81.45 or on a breakdown below $67.29 with confirming negative stochastic, MACD, and relative strength indications. If shorted, set an initial stop loss 8% above the entry price.

Meet Jeffrey Hirsch at the upcoming MoneyShow in Las Vegas, May 9th–12th. The seasonal trading expert will discuss the election cycle and strategizes to “election-proof” your portfolio. Register here.