This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Are these high flying stocks poised for a second half drop?

By Robbie Citrino for Kapitall.

Over the past six months, stocks in the S&P 500 have gained 6% on average while the economy has seen little improvement. Although the unemployment rate has fallen, partially due to workers exiting the workforce at record pace,  GDP has expanded below expectations and far lower than justify the recent stock price increases. This could be devastating to large cap stocks that have seen massive gains this year.

Investors are relying on cheap capital to buoy their investments, and, as long as rates are low, their money will keep flowing into the market. However, investors are prepared for an increase in rates once certain benchmarks, given by the Fed for the past few years, are met. Recently, we have seen a decrease in bond buybacks based on decreasing unemployment; however the Fed has focused on lackluster GDP expansion and low inflation.

Therefore, stocks that are propped up due to expected increases in revenues from an expanding economy could nosedive in the second half if rates rise. On this list reside some very elastic companies (meaning they fluctuate greatly based on economic conditions) including luxury car maker  Tesla (TSLA), video game company Electronic Arts (EA), and American Airlines (AAL).

In addition to a slow economy, investors’ move to safe treasuries and the fact that only 40% of CFOs rated the economy as ‘good’ are warning signs of an teetering financial ecosystem. All eyes will once again be on Janet Yellen today and the GDP numbers later this month to see if both an increase in tapering and a pullback in the economy will cause investors to scramble.

Could inflated stocks take a hit in the coming months or will investors turn a blind eye to past economic conditions? Use the links below to start your own analysis, and tell us what you think in the comments!

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs