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5 Toxic Stocks to Sell Now


I'll be honest: I like Lowe's (LOW) from a fundamental standpoint. But that isn't stopping this $31 billion home improvement stock from showing up on our list of toxic names right now.

Of all the names we're looking at, Lowe's is the least worst. By that, I mean that it's merely a "don't buy" rather than a "sell now." Here's why:

Lowe's had been looking strong in 2012 -- in fact, shares have climbed up 4.6% since the start of the year. But that all changed back in early May when LOW topped and started moving lower. From a technical standpoint, Lowe's is currently forming a bearish descending triangle pattern, a setup that's formed by a horizontal support level (at $25) and downtrending resistance.

>>7 Stocks for a Housing Rebound

Essentially, as shares of Lowe's bounce in between those two technical levels, this stock is getting squeezed closer and closer to a breakdown below $25. When that happens, overly eager sellers have knocked down the pocket of buyers that's caused that support level to exist. That's a sell signal for LOW.

Momentum, measured by 14-day RSI, may be making higher lows in the short-term, but overall, it's still in downtrend mode. Since momentum is a leading indicator of price, that's extra reason to keep your distance from shares.

If you're looking for a buying opportunity, I'd strongly recommend staying away unless shares can start making higher lows. Earnings on August 20 are the next big catalyst to wait for.

Stock quotes in this article: LOW, ALB, PT, USMO, KYAK 

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