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Stockpickr) -- Make no mistake, U.S. stocks are in a correction right now.
After a breakneck rally in May, equity markets are taking a breather and retracing some of the massive move. And from my vantage point that's just fine for stock bulls as we approach June. The rally we've been in the midst of since November has been replete with corrective action; it's why this rally has been so healthy and sustainable since it kicked off.
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It's also why stock indices have been able to keep moving higher, much to the confusion and dismay of short sellers. A corrective setup in the
S&P 500 on Friday put in a price target at 1,625, a price that's just a few points away from yesterday's lows. We'll see today whether that level gets tested again.
But to be clear, not all stocks look corrective right now. Some look downright toxic for your portfolio. It makes sense to unload those names as we approach the stock market's "slow season" this summer.
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,
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.
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