3 of the Most-Shorted Stocks with Bearish Charts

  • Upstart Holdings (UPST) is a market casualty and its own bearish victim.
  • Fisker (FSR) shares are warning of new relative lows.
  • Nordstrom (JWN) is offering a well-priced bearish short entry.

Source: Shutterstock

Once more, the bears in the market are successfully defending against would-be bargain-hunters this week. And right now, with stocks under increased pressure, the price charts in these most-shorted stocks are offering investors well-qualified bearish entries to trade with the trend.

It has quickly turned into a third straight week where Wall Street’s bad actors have been making themselves at home. Netflix’s (NASDAQ:NFLX) awful earnings report was a bearish shot over the bow. And with ever-rising interest rates and ongoing economic worries tied to Covid-19 and Russia’s invasion of Ukraine, it’s been tough lately for bullish buyers.

In fact, it may be time to consider investing more smartly in a broader bearish cycle that might be just getting started. As such, today let’s review the longer-term price charts of three of the market’s most-shorted stocks. These charts are setting up nicely for bearish positioning and a bit of portfolio diversification.

UPST Upstart Holdings $75.11
FSR Fisker $10.82
JWN Nordstrom $26.42

Upstart Holdings (UPST)

Upstart Holdings (UPST) three trendline failures warns of deeper bear market correction in this most-shorted stock
Source: Charts by TradingView

Upstart Holdings (NASDAQ:UPST) is the first of our most-shorted stocks to trade.

The trend has been down in a very large way in UPST stock. Shares shed more than 80% since peaking in October at just over $400. And while that may sound like a bargain-hunting opportunity, it’s not shaping up that way.

It’s fair to call Upstart a casualty of the broader de-risking out of growth stocks. Investors are bearishly pricing in the negative impact of rising rates on future earnings. But UPST is a highly shorted stock that’s also a victim of its own success.

The cloud-based, artificial-intelligence-backed fintech had buzzword power that made it a momentum favorite among bullish investors. Shares added as much as 900% in 2021.

It’s obviously too late to fade that crazed behavior.

Today’s 20% short interest definitely puts it among the most-shorted stocks, courtesy of a less-hospitable market environment and third failure of trendline support, and 76% retracement level. That’s backed by a bearish stochastics indicator and iffy Bollinger band pattern to make this a friendlier trend trade for bears.

A summer-dated, out-of-the-money bear put vertical for controlling risk and leveraging the downside is a favored way to position short in UPST stock.

Fisker (FSR)

Fisker (FSR) bearish flag formed against prior up channel nearing a technical breakdown in FSR stock
Source: Charts by TradingView

Fisker (NYSE:FSR) is the next of our most-shorted stocks to short as a bear.

The luxury electric vehicle (EV) play recently announced some good news — it expects to roll out its first vehicles by the end of this year. And there’s a line out the door for the Fisker Ocean SUV, with more than 40,000 reservations.

It sounds good, and FSR stock could even look relatively attractive compared to Tesla (NASDAQ:TSLA) and Lucid Motors (NASDAQ:LCID) on paper once the literal rubber starts to meet the road.

But right now, the only lines that matter are on the price chart. And that’s looking increasingly attractive for this stock’s bearish short interest of 32%. Technically, January’s channel breakdown has developed into a smaller bearish flag pattern that’s formed beneath the larger failure.

With both formations having tested Fisker’s former $10 Net Asset Value (NAV) multiple times, along with stochastics signaling a bearish cross and many other SPACs already crashing through their NAVs, the bears appear to be in the driver’s seat.

With earnings in early May, the May $10/$8.50 bear put spread looks attractive both off and on the price chart.

Nordstrom (JWN)

Nordstrom (JWN) bearish positioning against downtrend and Fibonacci resistance
Source: Charts by TradingView

Nordstrom (NYSE:JWN) is the last of our most-shorted stocks to short.

The upscale retailer has seen a bit of rising short interest in recent weeks, despite shares rallying out of a monthly chart bear flag on the back of better-than-expected earnings.

With consumers at risk in today’s inflation- and rate-challenged environment, the bears who are short 21% of JWN’s stock float may be right. And today, the weekly price chart in this most-shorted stock is saying it’s time to shop before the price drop.

Technically, shares of Nordstrom have just confirmed a pivot high within a 13-month downtrend. With the weekly candle set against pattern resistance, the 38% retracement level and an overbought stochastics just crossing over, it’s time for bearish investors to move.

Rather than shorting JWN stock, price and risk-aware shoppers may also consider the Jun $25/$20 bear put vertical for positioning through late May’s earnings.

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.

The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/3-of-the-most-shorted-stocks-with-bearish-charts/.

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