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Well, today sure sets us up for a fun week ahead, right?

Following a sell-off on Friday, the SPY is down over 3% in the last two sessions.

VIX – the volatility index and its tradeable derivatives – VXX and UVXY – are having a bit of fireworks as well – something we haven’t seen in a while.

Now, I’m normally not the type of guy to call out market tops… I’m a Raging Bull after all!

But days like today may get people nervous and rightfully so – having been nothing but up for pretty much a year and a half, the market may sure give us at least a pull back.

Here’re 3 names I’m watching to play for the downside:

NIO Inc – NIO

  • Market Cap: 71.57B
  • Free Floating Shares: 1.35B
  • Short Interest: 4.6%
  • ATR: 2.50

I think it’s fair to assume I don’t have to explain what NIO is – the “Tesla of China” has been one of the most popular stocks over the past year.

There’re a few things I appreciate about this name:

  1. A pop and immediate fall to above $50 a few months back
  2. An immediate dip and hold to below $45 – an area was previously resistance turned support
  3. Complete failure to move higher with the market over the past 2 weeks

The stock looks like it just needs to go down some more and should everything sell off – I don’t see why NIO can’t lead the way lower.

The stock looks like it just needs to go down some more and should everything sell off – I don’t see why NIO can’t lead the way lower.

I’m interested in pops under $45 for a flush trade to $35 and under.

Fiverr – FVRR

  • Market Cap: 7.52B
  • Free Floating Shares: 29.38M
  • Short Interest: 6.55%
  • ATR: 10.94

Fiverr is an online marketplace for gigs and freelance services.

It doesn’t enjoy nearly the fame (or infame) of NIO, but the fact you likely never heard of it couldn’t stop the stock from being one of “COVID darlings”.

It went from $20 early last year to a high of $336 this February.

Much like NIO, the name has retraced since, failed a breakout and has been unresponsive to the marker’s upticks.

I really want to see it not be able to hold $200 for more drift to $150 and lower.

Crocs, Inc – CROX

  • Market Cap: 7.55B
  • Free Floating Shares: 63.70B
  • Short Interest: 4.96%
  • ATR: 4.01

I’m going to bet you didn’t see this one coming?

The maker of eponymous sandals has been one of the strongest performers of 2021 and hasn’t looked back in… well, feels like forever!

Now, I generally don’t short strongest stocks, but:

  1. The business sure has been good, but does it justify the nearly 3x pre-COVID valuation?
  2. As I said, the stock literally hasn’t had a pullback in forever
  3. Over the past few weeks, it had multiple failed breaks higher
  4. The risk/reward is very good at these levels

Now I’m not convinced yet, but I consider any protracted hold below $110 as bearish.

If weakness starts to maintain, I’m looking for a trade to $100 and eventually to old support in the $80s.

Author:
Jason Bond

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