It's great when the fundamental story of a stock and the technical picture comes together. You should have more confidence in your analysis and investment decisions in those moments. It's another story when the fundamental recommendation is to buy or "overweight," but the chart has been eroding and telling you to sell.
I reviewed nine stocks that Deutsche Bank has recommended and found none of them currently attractive to me on a technical basis. I then went through the list again and five of the names have seen so much deterioration that I think they should be sold. Check out my list.
In this chart of Alphabet (GOOG - Get Report) (GOOGL - Get Report) , using the GOOG ticker, we can see a triple top in the November/December/January period. In addition to a top pattern the On-Balance-Volume (OBV) line peaked in November telling us that for months we have seen day-after-day with heavier volume being traded on days when GOOG closed lower. This is not a healthy underlying situation. Prices have broken below the 50-day moving average line. In the bottom panel there is a small bearish divergence between the higher price highs and weaker momentum readings.
GOOGL is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio.
"Alphabet is the cheapest of the FANG stocks, and if the dollar stays week, as it has been, I think there could be a massive upside surprise," said Cramer. "Ever since CFO Ruth Porat, late of Morgan Stanley, stepped in, this thing's been humming, and I think it will just get better and better."
2. Eli Lilly
In this chart of Eli Lilly (LLY - Get Report) , the top was made from June through December. The OBV line peaked in July and has been declining steadily. And then there is a death cross in February as the 50-day average line fell below the 200-day line.
Prices have been going down the past 12 months. The thing about trends is that they will persist until they reverse. I do not see a reversal on this chart. The OBV line confirms the decline. Prices are below the declining 50-day and 200-day moving averages. The real problem with the chart of PRGO is that there is no nearby support.
4. Twenty-First Century Fox
Twenty-First Century Fox (FOXA) has mostly gone down the past 12 months. Again the OBV line suggests that we have been watching aggressive selling for months.
5. Alliance Data Systems
Alliance Data Systems (ADS - Get Report) was weakening in early 2015, but it wasn't until November that the downtrend really got in gear. Prices have made a weak bounce off the lows and the lack of strong volume and accumulation suggest we are going to see a retest of the lows and maybe further declines in the weeks ahead.