The financial sector is showing some cracks this spring.
Make no mistake, financials have had a great run lately--in the past six months, the financial sector has been the single best performing segment of the S&P 500 index. But all trends eventually come to an end, and some of the biggest stocks in the financial sector are waving some pretty conspicuous red flags right now.
In other words, it might be time to ring the register and take some of those financial sector gains off the table in May before things roll over.
Of course, not all stocks are affected equally by the sector malaise. To figure out which major financial stocks could be about to turn "toxic" for your portfolio, we're turning to the charts for a technical look at three to sell.
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 entry and exit points.
Just so we're clear, the companies I'm talking about today are hardly junk. But that's frankly irrelevant to what happens to their stocks; 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.
Without further ado, let's take a look at three "toxic stocks" to sell--and when to sell them.