5 Stocks With The Largest Downside Risk This Week

Each week Forcerank runs a variety of games covering different industries. What we have found, is that the largest change in average user rank is indicative of swings in price action for the week. This week the biggest declines featured popular names like Nvidia (NVDA) and Amazon (AMZN). To receive the rest of the rankings, visit the Forcerank Blog or sign up for next week’s contests and we will send you the consensus data Monday morning.

Amazon (AMZN) It’s difficult to imagine Amazon on a list of losers regardless of what the situation might be, but this week Forcerank users dropped the retailers avg ranking from 1.7 to 4.1. Amazon still ranks highly in the hardware contest but such a large drop in average ranking signals near-term volatility. At $760 per share some investors have grown concerned that Amazon can’t sustain trading at 175 times TTM earnings. The stock also took a beating recently following Trump’s shocking election victory. Amazon’s CEO, Jeff Bezos, and President Elect Trump haven’t seen eye to eye but the main concern is how Trump approaches trade policy. Any restrictive tariffs or embargoes will put pressure on Amazon’s operations around the world. From a technical standpoint the recent losing streak spurred a bearish crossover in the MACD along with the 50 day moving average eclipsing the short term 20 day average.

Nvidia (NVDANvidia posted one of the largest beats, percent-wise, this earnings season among all the companies in the S&P 500, so it seems odd to find it on a list of downward trending companies. But as the saying goes, “what goes up, must come down”, and that’s where Forcerank users stand with Nvidia. Its run at the top came to an end this week after NXPI took the top spot in the Semiconductors space. The average user rank also dropped to 4.3 after idling in the mid 2s for the past couple weeks. After its most recent run the stock is trading at about 50 times TTM earnings and about 32 times forward earnings. Its up for debate whether that could be considered overvalued given the multiple of some technology companies. Regardless, key technical indicators support additional downside on the horizon. A bearish crossover in the MACD along with two unfilled gaps below insist the chipmaker must retrace some of its gains from the past 30 days.  

Starbucks (SBUX)  Starbucks was dealt a massive blow this past week afters its renowned CEO Howard Schultz decided to step aside from his position for a smaller role in the company. Many believe this will turn out to bite the coffee chain as it did nearly 10 years ago, which is why we are seeing a drop in average user rank this week. Forcerank users gave Starbucks an average rank of 4.7 this week compared to 4 the previous week. Meanwhile McDonald’s (MCD) recent initiative to expand its McCafe brand will put pressure on the near term outlook of Starbucks. The golden arches is claiming it will sell coffee anywhere between $1 and $2, roughly half the price of any Starbuck’s beverage.

Salesforce (CRM) Salesforce dropped from the second to fifth this week despite any specific news events driving price movement. It's likely a cyclical movement after the company reported strong third quarter results in November. Shares have since dropped to $70 after eclipsing $80 per share. This movement started with a bearish crossover in the MACD, which now sits in negative territory, and steadily declining on balance volume. All this caused the stock to break below multiple levels of support as it looks to close a gap in the mid $60 range.

Darden Restaurants (DRI)  Darden Restaurants, like many other restaurant stocks, received a massive bump following Donald Trump’s shocking victory, but fundamental weakness and a technical breakdown looks as if this run is coming to an end. The stock is currently trading in the upper Bollinger Band and is slowly approaching a relative strength index of 80, the threshold indicating overbought conditions. Meanwhile a MACD on the verge of a bearish crossover could send the stock tumbling in the coming days. Darden’s volume profile for the past 6 months is consistent with a $60 share price suggesting a 25% downside.

Disclosure: This article was originally published in Forcerank on November 30, 2016. To learn more visit the  more

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