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Stockpickr) -- Even as the
S&P 500 stages an all-important bounce off of its long-term trend line this week, a bullish sign, a handful of names could be toxic to your portfolio this spring.
Not all names have been participating in the broad-based stock rally that's propelled the S&P 15% since November. And the names that are underperforming -- or showing signs of a major bearish change in trend -- could drag mightily on your investment returns this year. While a rising tide lifts all ships in a bull market, it also hastens the sinking of the few ships with holes in them.
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One of the biggest red flags right now is relative weakness -- the stocks that aren't participating in the across-the-board equity rally are the ones that you need to think about unloading. And the ones that are looking outright bearish are the ones that you need to sell now. Today, we'll take a look at five toxic stocks that you need to be aware of.
To be fair, the companies I'm talking about today aren't exactly "junk."
I mean, they're not next up in line at bankruptcy court. But that's frankly irrelevant; from a technical analysis standpoint, they're some of the worst-positioned names out there right now. For that reason, fundamental investors need to decide how long they're willing to take the pain if they want to hold onto these firms this fall. And for investors looking to buy one of these positions, it makes sense to wait for more favorable technical conditions (and a lower share price) before piling in.
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For the unfamiliar,
technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.
So, without further ado, let's take a look at
five "toxic stocks" you should be unloading in April.
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