) - By now, you've probably heard the clichéd expression "sell in May and go away" about a million times. I've said before that I don't think it's good advice for the broad market in 2013 -- but for a small group of "toxic stocks," that trite phrase could be pretty sage wisdom.
Yes, it's true. In spite of a broad market rally that's sent the
around 15% higher in 2013, some stocks look toxic right now.
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And those 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.
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."
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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 summer. 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.
For the unfamiliar,
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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