From a list of 30 names that Morgan Stanley recommends for the next three years, I culled out five stocks whose charts are telling a different story.
Of the 30, these are the five I'd be least likely to want to hold for three years.
Also check out the five stocks I thought were long-term winners.
Though SBA Communications (SBAC - Get Report) has done well from its 2011 lows, prices rolled over last year and remain below the declining 40-week moving average line. The On-Balance-Volume (OBV) line has had a slight downward cast to its line since early 2015. SBAC looks like is under distribution with longs being more aggressive on the sell side.
L Brands (LB - Get Report) more than tripled from its 2011 lows, but the price action since late 2014 has been different with prices rolling over and a visible neckline at $80 that could get broken soon, completing a top formation. LB has traded above and below its 40-week moving average line and its OBV line has been neutral since the first half of 2015. Overall the chart of LB looks like rounded top formation and this doesn't look like a chart we want to own for the next three years.
HCA Holdings (HCA - Get Report) reached a peak in 2015 and then declined to break the 40-week moving average line. Prices have recovered about half of its prior losses but the OBV line is barely moving higher and prices are behaving more like a top than a serious correction. HCA would have to break out to new all-time highs to get me more enthusiastic about the three-year time horizon ahead for this security.
CVS Health (CVS - Get Report) has made no upward progress in over a year. Prices have crossed the 40-week moving average a number of times and the slope of the average line is now bearish or downward sloping. The best days for CVS may be behind us and strong gains may be hard to achieve in the weeks ahead.
International Business Machines (IBM - Get Report) may be a favorite selection of Warren Buffett but the three-year downtrend in prices for Big Blue and a weak OBV line makes it my least favorite stock to hold for the next three years. This chart shows a lot of resistance above $165 and more above $180. I think better investment ideas are elsewhere.