Stockpickr) -- The
S&P 500 is knocking out new highs this week, but that's not stopping some of Wall Street's biggest names from looking "toxic" as we head into March. Own these names at your own peril.
Over the course of this broad market rally, there's been a bigger-than-normal gap between the leaders and the laggards. In a very real way, the S&P 500's 22% run higher in the last 12 months has magnified the benefits of owning momentum leaders -- as well as the underperformance you'll see if you hang onto the toxic names.
Want to secure market-beating performance in 2014? Then avoiding the performance drags on your portfolio is more than half the battle. That's why we're taking a technical look today at five toxic stocks you should start selling.
>>5 Big Charts to Trade for Gains
Just to be clear, the companies I'm talking about today aren't exactly junk. By that, I mean they're not next up in line at bankruptcy court. But that's frankly irrelevant; from a technical analysis standpoint, sellers are shoving around these toxic stocks 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 in the weeks and months ahead. 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.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts