BALTIMORE (Stockpickr) -- On the off chance you're just checking in your portfolio after sitting out of the market for the last five months, you haven't missed much.
Since the calendar flipped to January, the S&P 500 has climbed a whopping 2.4%. Breakneck gains those aren't, particularly when compared to the nonstop rally of 2013. But even those paltry returns are wishful thinking for most investors; while the big indices are sitting just a few points shy of all-time highs, the average stock in the S&P has pulled back double-digits from their highs.
I'm not exaggerating when I say that the biggest gains this year haven't come from picking the right stocks. They've come from avoiding the wrong ones.
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And as summer approaches, a growing list of names is looking very wrong. Today, I'll show you five big "toxic stocks" you need to unload before the next leg down.
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.