Setting My Sights on Short Candidates

Who doesn't want to pay 80x forward earnings for some noodles? Well, me for one. I'm just not excited about Noodles & Company (NDLS). Sure the company is new and expanding, but I hesitate on recent IPOs lacking cash, wanting big growth and then providing tepid guidance. Add on a chart that looks like a wet noodle under $40, and there is a ton of risk in buying Noodles right now.

Noodles & Company (NDLS) Source: StockCharts.com View Chart » View in New Window »

The stock already has three strikes against it from the technical side. The moving average convergence/divergence has crossed over in a bearish fashion, the commodity channel index has plummeted, now running well below -100, and price is breaking lower out of a tight Bollinger band setup. If it weren't for the support at $40, I would be looking to join the other 6% of the short float on that side of the coin. So for now, this is an avoid on the buy side for me and a closely watch for a short entry....310 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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