It’s another down week in a downer of a year for many investors. And it’s not just the market’s sad sack, most-shorted stocks either. Even sacred cow large-cap tech stocks are under pressure.
But are Wall Street’s bears taking today’s fair market pricing too far?
By the looks of three price charts in tech heavyweights, which also happen to be some of the market’s most-shorted stocks, that appears to be case as we’ll explore below.
The fear is real or so it feels in today’s still slippery, risk-off stock market.
The S&P 500 is off 2% this week on ever-growing toxic mix of interest rate, inflation, supply chain and geopolitical concerns. It gets worse, of course.
With March just underway the broad-based, large-cap bellwether is down over 6% and 10% year-to-date. And at its worst from January’s all-time-high, the SPX has shed as much as 14.5%.
But nowhere are investment accounts feeling that pain more than those invested in growth sensitive, tech portfolios…well, other than those typically bungling, most-shorted stocks.
The tech-heavy, large-cap Nasdaq has already entered a bear market this year after surrendering as much as 22% last week at the onset of the Russia Ukraine conflict.
Today, and with fear running at heated and historically unsustainable levels, let’s take the best (or worse) of both worlds and offer three most-shorted stocks, which also happen to be down on their luck large-cap tech stocks for extreme buying opportunities.
Most-Shorted Stocks to Buy: Teladoc (TDOC)
Source: Charts by TradingView
The first of our large-cap tech plays to buy which also happens to be among the market’s most-shorted stocks is Teladoc.
This $10.75 billion tech-driven, virtual healthcare play has come a long ways since becoming an overnight sensation with Wall Street on the back of the pandemic.
And for the buy-and-hope for more crowd, it hasn’t been pretty. Since peaking last February at $308, TDOC stock has tumbled 78%.
It’s certain to have made this most-shorted stock’s short interest of 15% happy campers.
Today though, the extreme technical damage raises the specter that bears need to pack their bags and find another spot to set up camp.
Technically and as this most-shorted stock’s lifetime monthly chart reveals, TDOC has formed a bullish hammer.
In all fairness, that’s not entirely uncommon these days. But Teladoc’s shares do have something of more extreme value which most other large-cap, market-leading stocks don’t.
With the reversal pattern forming beneath a pair of deep Fibonacci levels and trendline support, and stochastics oversold, but on the cusp of a bullish crossover, there’s little doubt that today’s “fair value” won’t stay that way for long.
Zillow (Z)
Source: Charts by TradingView
The next of our most-shorted stocks to buy is Zillow.
Despite this past year’s sizzling housing market and Zillow’s massive popularity with homebuyers, the $13 billion online real estate platform hasn’t been a hot property for Z stock investors.
Similar to TDOC stock, Zillow’s shares have caved by 75% since peaking last February at $208.11.
As with Teladoc though, this most-shorted stock’s 17% bear population needs to find new digs to call home.
Technically, a monthly chart bottoming attempt out of an inside candlestick formed just beneath 76% Fibonacci support has struggled.
But more aggressive cash buyers could be stepping in soon. Should this most-shorted stock’s monthly stochastics firm up enough to signal a bullish crossover, Z will have a much stronger chance to become a hot property once more.
Most-Shorted Stocks to Buy: Lucid Motors (LCID)
Source: Charts by TradingView
The last of our most-shorted stocks is Lucid Motors.
LCID stock is the largest of today’s tech stocks to buy at a valuation of $37 billion. But don’t let the market cap fool you.
For the majority of shareholders over the past year, this most-shorted EV play has been a car wreck. From its all-time-high last February, shares are off 65%.
And after a strong respite this past fall as Lucid’s Dream Edition rolled off the production line and enthusiasm over Biden’s $7.5 billion toward electric vehicle infrastructure fizzled, shares are off by about 61%.
As with our other most-shorted, large-caps though, it’s time to consider parking capital in LCID and for the stock’s 19% short interest to get out of the driver’s seat.
Today and with shares of Lucid wedged in-between multiple layers of deep Fibonacci and uptrend pattern support, there’s a lot to like in this most-shorted stock.
Of course, and as the weekly chart hints, don’t go boasting about today’s advantage to investors that may have purchased LCID stock the past couple weeks inside the support area.
But while the fear trade blanketing the market has foiled recent purchases, there are numerous reasons off and on the price chart to appreciate that near-term pain will be traded in for long-term gains down the road.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
