BALTIMORE ( Stockpickr) -- When it comes to the stock market, looks can be deceiving.
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For instance, even though the S&P 500 is up more than 10% since the beginning of 2014, nearly one-in-three S&P components is actually down on the year. Ditto for the Dow. Move down the scale to small-caps, and even though the Russell 2000 index is up slightly year-to-date, more than half of the stocks in the index are down. Put simply, stock selection still matters in this market.
I'm not just talking about picking the right stocks -- avoiding the wrong stocks is just as important. And the stats show that it's been easy to pick the wrong stocks this year. But that doesn't mean you need to keep them…
Today, we're taking a closer technical look at five new charts that are looking "toxic" this fall…
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.
So, without further ado, let's take a look at five "toxic stocks" you should be unloading.
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