4 Struggling Stocks With "Harmless" Pullbacks

Subscribers to Chart of the Week received this commentary on Sunday, November 16.

Animals, like stocks, have a “story” in their genes. John Maynard Keynes called them animal spirits for a reason. With investor sentiment started to pivot, I thought we should stay on the lighter side this weekend, using two species of snakes whose “lore” relates to data from Senior Quantitative Analyst Rocky White.

Coral vs. King

Did you know? Coral snakes are some of the most venomous snakes on the planet. King snakes are not, though they look like a dead ringer to coral. Coral have red bands touching yellow bands, while king snakes have red bands touching black bands. That small detail makes a world of difference. It’s also so insanely sick that harmless mimics out there, over the course of thousands of years, have adjusted their body composition to align with scary predators and goose up their survival chances.

Who are the king snakes on Wall Street, the stocks that might look scary but are in fact harmless?

White has a table of stocks that looks back five years, identifying a stock’s major highs and lows. The tables below list stocks within 0.75 average true range of their major highs and lows.

Rocky finds the “Prior Low,” defined as the low from 1 month ago to various timeframes up until 5 years ago. It’s a pretty useful metric to establish potential support/resistance. From there, I worked backward and found other contrarian signals flashing within these names.

CRISPR Therapeutics AG (NASDAQ:CRSP)

CRSP has lost 21% this quarter and 23% off its Oct. 8 annual high of $78.48. But its prior low from Sept. 2 around $51 has held up, as well as its 200-day moving average. The shares only fell 0.7% post-earnings earlier this month after a narrower-than-expected loss, and its experimental cholesterol treatment appears to be a success. Factor in a 14-day Relative Strength Index (RSI) at 30, and I don’t think you get bit if you yoink this snake.

Crocs Inc (NASDAQ:CROX)

Hear me out. Aug. 8 prior lows at $73 held to end the week. Nothing pretty about this stock right now, but there’s reason to be optimistic after earnings with the top-line beat and flurry of price-target hikes. Options are affordably priced, per our SVI, so if you’re dumpster diving, and find something interesting, there are worse ideas out there.

Palantir Technologies Inc (NASDAQ:PLTR)

Well, well, well. The House of Thiel is so far holding on for dear life on Friday. The RSI is very middling, but there’s additional support at the 100-day moving average. There might be a double top forming though, and PLTR is one of the easiest targets when you think “AI valuation concerns.”

AppLovin Corp (NASDAQ:APP)

APP is another name I thought for sure would keep sliding into Friday and throw this whole article into a bind, but hey; chart support, it works! The stock’s prior lows at $545 were briefly breached on Friday but quickly pivoted. It’s not “oversold” by any means, but the 80-day trendline is helping out. Even below that, $500 was a peak in February.

All four of these names also have implied volatilities at modest-to-low levels, a boon for options traders looking for stocks going through a post-earnings volatility crush.

It’s a Trap!

Confession: On the other end of the snake spectrum is the spider-tailed viper, which uses a spider-like tail to lure birds. It’s nicknamed the “false-horned viper” because idiot birds will go for the wrong horn and get wrecked. So for these stocks, I’m looking at names that have done pretty well but for whatever quantitative reason, could be value traps that haven’t seen the floor yet.

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