BALTIMORE ( Stockpickr) -- Stocks climbed another half-point higher yesterday, clawing back performance after the S&P 500 shed around half of its year-to-date gains at the start of August. But that doesn't mean investors are out of the woods just yet. If you own one of these "toxic" stocks, your portfolio could still be in store for a world of hurt.
All told, it's been a pretty perfunctory year for stocks; the S&P 500 is up 5.8% since the calendar flipped to January, putting the big index on track for a 9.5% year. But that's only part of the story. As I write, a full third of the S&P is actually down on the year. And of those names, close to a third are down by double-digit percentages.
Clearly, betting on the wrong names in 2014 could leave you with drastically different performance than the S&P suggests. And that's exactly why you need to avoid the toxic stocks this summer.
So today, we're taking a technical look at five toxic stocks you should sell.
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.