Much like their larger counterparts, it’s been a rocky ride for small-cap stocks, with the Russell 2000 down 2.8% in the last month.Small-cap stocks seemed to be showing signs of life starting on Tuesday, when they strongly outperformed the broad market…but since then, the Russell has struggled to hold 1,190.
In this environment, several small-cap stocks are flashing bearish signals — including some whose prices have broken even long-term support levels.
Here are four such stocks that you should jettison if you own them, or even switch to a bearish stance.
Five Below Inc (NASDAQ:FIVE)
First up is Five Below Inc (NASDAQ:FIVE), a U.S. retailer targeting teenagers and pre-teens that came public in 2012. On Jan. 16, FIVE suffered a Downside Breakout on nearly 9.5 million shares traded.
In the chart below, you can see that Five Below stock had been trading between $34 – $46 for much of the last year before finally breaking that lower support line in mid-January:
The Profit Scanner powered by Recognia notes that this kind of move tends to signal the end of a consolidation period and the beginning of a new downtrend. While there may be small pockets of upside along the way, the Profit Scanner’s long-term target for Five Below is a further decline to the $24.25 – $26 area.
GrubHub Inc (NYSE:GRUB)
GrubHub Inc (NYSE:GRUB) is also looking technically broken in the long-term. As with the rest of the Russell 2000, GrubHub showed some positive momentum on Tuesday, Jan. 27 — but then GRUB stock price closed below both the intermediate-term and the long-term moving average.
Specifically, the Tuesday close of $35.32 marked a cross below the 50-day moving average and also the longer-term, 200-day moving average. Since moving averages essentially track the general trend of a stock, a cross under the moving average is a sign that the trend has shifted for the worse.
The Profit Scanner now considers GrubHub to be in a new downtrend in both the intermediate-term and the long-term.
Beazer Homes USA, Inc. (NYSE:BZH)
Next up is Beazer Homes USA, Inc. (NYSE:BZH), a well-known homebuilder with a $450 million market cap. On Jan. 16, BZH broke both the 50-week and the 200-week moving averages, a strong bearish signal for the long-term. Then, on Jan. 28, BZH stock suffered yet another bearish event.
Like with GrubHub, Beazer Homes’ latest bearish signal has to do with its 50-day and 200-day moving averages. However, in this case the 50-day moving average itself actually crossed below the 200-day moving average, as you can see in this chart for BZH stock:
When a shorter moving average crosses a longer moving average in this fashion, it implies that the stock is trending lower. Combined with BZH stock’s cross below the 50-week and 200-week moving averages earlier this month, the technical picture for Beazer Homes is not looking good.
Shutterfly, Inc. (NASDAQ:SFLY)
And finally, Shutterfly, Inc. (NASDAQ:SFLY) also began to flash a long-term bearish signal on Jan. 28. Best known for its customizable photo books, Shutterfly took a hit on Wednesday, closing at $43.61, which marked a break of the 200-day moving average:
As with FIVE, GRUB and BZH, that’s not to say that there won’t be some good days for SFLY stock along the way.
However, the technical evidence uncovered by the Profit Scanner amounts to a pretty dire big picture for all four stocks. If you’re a buy-and-hold investor who’s looking for excellent stocks to hold for “a year and a day,” as the saying goes, then you may want to stay away from these names.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.