When investing in the stock market, we always want to approach it as a market of stocks.
Regardless of the environment, there are always stocks showing leadership and trending higher. We may have to look harder to identify them depending on current market conditions… but there are always stocks that are going up.
The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too.
We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club. We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics.
Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports. Now, we're also highlighting lagging stocks on a recurring basis.
Welcome to the Short Report.
We'll publish this column every other week and rotate it with the 2 to 100 Club. The purpose of this scan is to highlight our favorite short setups in some of the worst-performing stocks in the world.
We start with every stock in the S&P 1500 with a market cap greater than $1 billion.
As usual, we apply price and liquidity filters. And we filter based on relative performance in order to separate the names that are trending lower versus the broader market.
We eliminate any stocks that are in bullish momentum regimes, as overbought readings are characteristics of uptrends — and we're looking for downtrends. Then, we remove any stocks that are not within 5% of 52-week relative lows. Finally, we sort this list by proximity to new 52-week absolute lows.
Using these filters, we're confident we're identifying the worst stocks the market has to offer.
Here's our current list of laggards:
Click table to enlarge view
Let's discuss some of our favorite short setups from this week's scan!
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