BALTIMORE (Stockpickr) -- Big pharma has been a solid performer for most of this year. The pharmaceuticals industry is up more than 8.5% since the calendar flipped to January, outpacing the S&P 500 and the other big indexes by a meaningful margin. Put another way, pharma stocks have been a welcome remedy for the lackluster performance seen elsewhere in the equity world.
But as the summer fast approaches, pharma and medical device stocks are starting to show some nasty side effects. In June, some of the biggest, most widely-owned pharma and device names could be hazardous to your portfolio's health. So today, we'll take a closer technical look at five stocks that are starting to look toxic -- and exactly what conditions need to get hit for the sell signal to trigger.
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.