3 weak stocks investors should dump
These names are flashing technical warning signs for the month ahead -- and beyond.
By Dan Burrows
April is a particularly cruel month, and it could be especially nasty for certain stocks if history and technicals are any guide.
Last year was simple. The S&P 500 ($INX) added 30 percent for 2013. A set-it-and-forget-it approach to investing delivered excellent returns. This year's relatively weak market is a good argument for taking a more active approach.
The S&P 500 is up just 1.3 percent through the end of the first quarter. Not that anyone expects a repeat of 2013, but at this rate, stocks will come in below consensus forecast for a 6 percent gain.
Not good. Which means if you want to beat that slim market return, you need to ditch your losers before they drag you down.
A number of stocks look like losers for April, but some look much weaker than others based on historical performance and current technicals. These three names in particular should be jettisoned now:
Sirius (SIRI) has stumbled so far this year and there's little hope for any kind footing in April. SIRI is off more than 7 percent for the year-to-date.
On average, SIRI adds 2 percent in April, but then sputters out again in May and June, according to Thomson Reuters. And even that average 2 percent gain comes at a price because it lags the industry by 4 percentage points. Given the technicals, it looks like SIRI won't even hit that average 2 percent gain this month.
SIRI is 23 percent below its 52-week high and 8.4 percent below its 50-day moving average. The 200-day moving average is even more bearish, with SIRI trading 13 percent below that level. SIRI also enters the month with little relative strength, scoring a 28 out of 100 on Thomson Reuters' Relative Strength Indicator. As such, SIRI joins the list of stocks to sell in April.
Cyber security company Symantec (SYMC) dumped its CEO after less than two years on the job and SYMC looks like it will continue to pay the price in April and beyond.
SYMC is off 15 percent for the year-to-date with more weakness to come. SYMC enters the month trading 26 percent below its 52-week high and 5 percent below its 50-day moving average.
SYMC is also 14.3 percent below its 200-day moving average. Furthermore, SYMC is entering a seasonally weak period of performance. SYMC stock loses an average of 0.5 percent in April, 0.1 percent in May and 2.2 percent in June. Relative strength is likewise weak, scoring 44 out of 100 on Thomson Reuters' Relative Strength Indicator.
Over the last three month, SYMC has had 31 up days and 31 down days. The best day produced a gain of 4.9 percent, vs. a worst day that saw SYMC lose 13 percent. That makes SYMC earn a place with the stocks to sell this month.
Gold prices are off 20 percent over the last year, and that looks like it will continue to hurt gold miners, especially Barrick Gold (ABX) in April.
Through good years and bad, ABX has lost an average of 6.4 percent in April over the last decade. It bounces back in May with a 4 percent gain, but then slides another 1.5 percent in June. ABX also lacks relative strength heading into the month, scoring a 40 out of 100 on Thomson Reuters' Relative Strength Indicator.
ABX is up 2 percent for the year-to-date, but the technicals say that the immediate trend is down. ABX is 38 percent below its 52-week high and 9.2 percent below its 50-day moving average. It also trades 1.6 percent below its 200-day moving average. From a technical standpoint, there's no reason to expect ABX to shine in April -- or through the rest of the spring -- and that lands it among the stocks to sell.
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As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
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