Over the last few weeks I have found myself looking for possible bearish investments. The rallies off the March lows and then after the little hiccups we saw in September and October have put the four main U.S. indices in overbought territory based on the weekly RSI and weekly stochastic indicators. The S&P, Nasdaq, and Russell are all showing overbought readings on their monthly RSI and stochastic indicators as well. The Dow’s stochastic indicators are in overbought territory, but the RSI isn’t there just yet.
If we use the Sector Select SPDRs as a proxy for each of the sectors and we look at the overbought/oversold indicators for them, we see a number of overbought readings. All but the utilities sector and real estate sectors are in overbought territory based on their weekly stochastic indicators. Only five of the 11 have 10-week RSI readings in overbought territory. That’s using the 70 level as the threshold for overbought. Eight of the 11 have RSI readings above 65, so several of the ones that aren’t overbought are close.
Because of the current situation, I have been looking for specific stocks that I think are ripe for downturns. Stocks that don’t have the best fundamentals, but have gone up with the overall market and have elevated overbought/oversold indicators.
Something that stood out in my search was a trio of software stocks with poor fundamental indicators and high readings on their weekly OB/OS indicators. I found these stocks when I searched for ones that have seen their weekly stochastic indicators make bearish crossovers in the last few weeks. Box, Inc. (BOX), Dropbox, Inc. (DBX), and Twilio (TWLO) all three showed up on that search.
Once I saw the stocks on the search, I pulled them up on Tickeron’s Fundamental Analysis screener and found that Twilio was rated as a “strong sell”. Box and Dropbox both have “sell” ratings.
Looking at the fundamental indicators, Twilio has zero positive signals and five negative readings. Dropbox and Box both have one positive signal and four negative ones. For Dropbox, its SMR rating is the only one that is positive. For Box, the seasonality score is positive, but even that isn’t a real strong reading.
There are three areas where all three stocks get poor ratings. All three have really bad scores in the P/E Growth ratings and bad scores on their Profit vs. Risk and Outlook Ratings. Twilio and Dropbox both get 100 on the Profit vs. Risk rating and that is the worst score a stock can get.
Looking at their charts, the trend on Box stood out to me. The stock has been trending lower since peaking in 2018. A trend channel has formed that defines the various cycles within the overall downward trend and the stock hit the upper rail a few weeks ago. We also see how the stochastic indicators made a bearish crossover this week.
The complete analysis from Tickeron appears below. It shows how the stocks compare to one another and how they stack up against other companies.
The RSI Oscillator for BOX moved out of oversold territory on April 18, 2024. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 21 similar instances when the indicator left oversold territory. In of the 21 cases the stock moved higher. This puts the odds of a move higher at .
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 64 cases where BOX's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The 50-day moving average for BOX moved above the 200-day moving average on March 26, 2024. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where BOX advanced for three days, in of 307 cases, the price rose further within the following month. The odds of a continued upward trend are .
BOX may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Momentum Indicator moved below the 0 level on March 20, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on BOX as a result. In of 74 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for BOX turned negative on March 20, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .
BOX moved below its 50-day moving average on April 10, 2024 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for BOX crossed bearishly below the 50-day moving average on April 15, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 19 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where BOX declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for BOX entered a downward trend on April 23, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.000) is normal, around the industry mean (29.871). P/E Ratio (42.597) is within average values for comparable stocks, (155.580). Projected Growth (PEG Ratio) (1.025) is also within normal values, averaging (2.725). Dividend Yield (0.000) settles around the average of (0.081) among similar stocks. P/S Ratio (4.087) is also within normal values, averaging (55.320).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 90, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. BOX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a platform for content storage, sharing, and collaboration
Industry PackagedSoftware