BALTIMORE (Stockpickr) -- The big S&P 500 index hit new record highs once again in yesterday's session, extending Mr. Market's year-to-date gains to 7.8%. But don't break out the champagne glasses just yet. A handful of "toxic stocks" could be getting in the way of that performance for your portfolio.
You see, despite a strong start to the year in the big indices, many individual names are struggling to get traction this summer. As I write, a full third of S&P 500 components is trading at a lower price today than back in January -- and a third of those names are down more than 10%.
The takeaways are pretty obvious: hang onto the wrong stocks, and you'll miss out on this rally. What's less obvious is which specific names you should be avoiding. So today, we're taking a technical look at five toxic names to 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.