Robinhood Markets (NASDAQ:HOOD). The app-based brokerage made a name for itself as a platform for brash, rule bending and bullish traders the past couple years. But from the very best of days to today’s more iffy environment, its time investors steal three top Robinhood stocks as bearish trades to profiteer from.
Is it or isn’t it? Depending on whom one listens too, or which strategies are relied upon, today’s stock market could be putting together a new bull market cycle. Investor’s Business Daily indicates that Wednesday is day three of a rally attempt in the S&P 500 and Nasdaq. But that’s just a first step. And there’s no guarantees a bullish phase will emerge or last for that matter.
Of course, many others insist the market is simply securing a well-deserved dead cat bounce in a bear market that’s just getting started. Given that, and without putting the horse in front of the carriage, here are three top Robinhood stocks which shape up as bearish shorts, off and on the price chart, and much to the chagrin of their bullish cheer squad.
Robinhood Stocks: Microsoft (MSFT)
Source: Charts by TradingView
Microsoft (NASDAQ:MSFT) is the first of our Robinhood stocks that’s positioned to be a cash cow for bearish shorts.
Since November MSFT stock’s bearish cycle has lopped 30% off shares at its recent low. It’s a classic correction and possibly even on the slightly larger size for a company of Microsoft’s size and market dominance. But bear market bottoms are rarely in the business of pleasing the masses like Robinhood’s bullish base. Sorry.
What’s more and despite its decline, this Robinhood stock remains historically expensive. Microsoft’s forward P/E of nearly 24 and a steeper price-to-sales multiple of 10 that’s also more than double what shares fetched for the bulk of the prior decade are fair warning.
MSFT’s monthly chart also reveals a stock that’s at risk of developing into a more menacing bear.
Technically, shares failed their Covid trendline back in February. During March and April former support proved itself as resistance and following May’s doji decision candlestick, June has signaled there’s more gloom ahead for this Robinhood stock.
Look to profit from a move toward Fibonacci and trendline support from around $194 to $214 using an intermediate-term bear put spread.
Source: Charts by TradingView
Twitter (NYSE:TWTR) is the next of our Robinhood stocks that’s bound to disappoint bulls and enrich bearish traders.
Unless you’ve been in suborbital space on 'Iron Man' Elon Musk’s SpaceX starship in recent weeks, and disconnected from Wall Street, you’re aware TWTR stock has been the object of the Tesla (NASDAQ:TSLA) CEO’s unstable and contingent-heavy buyout.
Robinhood stock investors cheering Twitter’s upside potential can argue Elon stands to lose a boatload if he walks away from the altar. And fairly, while it’s not quite that simple, a failed deal could cost him $1 billion. Still, as the world’s richest person and a guy known to take the road less traveled, don’t dismiss the chance of a nasty breakup.
Technically, this Robinhood stock is no friend to bulls either. Shares have been in a weekly downtrend for almost one and one-half years. Most recently and after foiling follow-along buyout investors, TWTR has been busy consolidating laterally beneath the its reactive 'Iron Man' Elon Musk price gap, bid announcement in early April.
Coupled with a bearishly trending weekly stochastics, both channel and Bollinger band support roughly 25% lower and TWTR’s Covid-tied 62% Fibonacci level already twice busted, trust this under pressure price chart. And then treat yourself and put a down payment on a Tesla with the proceeds from a bear put spread in this Robinhood stock.
Robinhood Stocks: Walmart (WMT)
Source: Charts by TradingView
Walmart (NYSE:WMT) is our final Robinhood stock and one where shopping for value stands to benefit bearish investors.
WMT stock comes in at No. 5 for shares favored by the broker’s bullish customers. Walmart’s good standing comes despite May’s profit miss and issuance of below-views and contracting earnings guidance for 2022 as inflation and customers gravitating toward lower margin necessities have worked against the retail giant.
The price chart also insists investors would be wise to give up shopping this Robinhood stock’s price cut in the wake of the report.
Technically, the initial 11% fallout in WMT has worked its way into a more troubling price consolidation as shares are now cracking below long-term trend and key Fibonacci support.
Combined with this Robinhood stock’s monthly stochastics also rolling bearishly over in neutral territory, a much larger correction could be in the works.
The next logical area of price support is WMT’s retracement and Covid bottom area spanning from about $93 to $106. And from today’s $121 level, that’s a price drop worth buying into, with a bear put spread!
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.
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Author: Chris Tyler
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