BALTIMORE (Stockpickr) -- The S&P 500 "suffered" the biggest correction of the month in yesterday's session, dropping 0.83% to close at 1,655 and change. Then again, anyone who thinks that an 83-basis-point dip in the S&P counts as a correction probably only started trading on May 1.
Mr. Market has been on a breakneck pace this month, racking up total returns of 4.8% since the calendar flipped over to May. Even factoring in yesterday's dip, that's an annualized 126% pace for stocks.
Clearly, that straight-up trajectory couldn't last forever. And now, with brutal selling overnight in Japan, stock investors are going to be giving back some of their gains in today's session. For reference, Japan's Nikkei 225 closed 7.32% lower in its most recent session; now that's a correction.Europe's following suit across most major indexes today too. This correction has shoved the Euro STOXX 50 down 2.28% as I write in the trailing hours of Eurozone sessions. But a correction isn't a crash. Overall, I still think that this broad market rally has the fundamental and technical legs to keep climbing higher, but I also think that it makes sense to put your finger on the "sell" button for the individual stocks that are looking winded right now. That's why we're taking a technical look at five big stocks that could drop in May. >>5 Trades to Take as Stocks Soar in May If you're new to technical analysis, here's the executive summary. Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time. Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at five high-volume stocks to trade. >>5 Stocks With Big Insider Buying
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV