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5 Big Stocks That Could Drop in May

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.

>>Warren Buffett's 5 Favorite Stocks for 2013

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

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