BALTIMORE (Stockpickr) -- The S&P 500 is quickly closing in on the double-digit gains mark this summer, up more that 8% year-to-date as I write. At this pace, the big index is on track to post total returns of 14.8% -- that's especially impressive performance when you factor in last year's breakneck rally.
But a small group of "toxic" stocks could be holding your performance back this year in a big way.
There's an old trite saying that "it's a market of stocks, not a stock market," and that's frankly been the case this year. Almost a third of S&P 500 components are actually down since the calendar flipped to January, meaning that it hasn't been hard to find exposure to a stock that's hurting your portfolio's performance this year.
That's why, 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.