BALTIMORE (Stockpickr) -- The S&P 500 may be hovering around all-time highs this week, but that doesn't mean all of its constituent stocks are. In fact, as I write, one out of every three stocks in the big index is actually down since the start of 2014. For comparison's sake, a whopping 91% of the S&P was up year-to-date this time in 2013.
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Put simply, picking the right stocks matters more this year. And avoiding the wrong ones might be even more important than that. That's why we're taking a closer look at five 'toxic' names to avoid in September.
Buying blue chips doesn't make you immune from owning toxic names. In fact, every single name on our list today is a mega-cap stock that's worth more than $100 billion in market value. So these aren't just names to avoid buying -- you might already own them today.
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.
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