by Sam Collins | March 5, 2012 12:41 pm
According to Riverfront Investment Group, “The good news is that in contrast [to Europe], the U.S. economy is turning slowly. For the first time in 35 years, manufacturing employment is increasing faster than non-manufacturing employment.”
But while the United States is in recovery, Europe is in what could be a long-term recession. S&P’s Global Markets says, “The United Kingdom and others have yet to get to the halfway mark. Europe has not come to terms with the financial dimensions of its debt challenge.” And in Japan, the yen is “weighed down by weak economic data and more activism.”
With the U.S. economy faring better than most in the world, it is appropriate to scale back in global securities. Banks and financial institutions with large interbank loans and credits should be sold, and manufacturers who depend on foreign sales, especially to Europe and Japan, should either be sold or closely reviewed for potential risks.
Here is our list of stocks to sell in March:
Although earnings for Alpha Natural Resources (NYSE:ANR) could increase from the massive loss of $3.76 per share in 2011, the upside is limited. The biggest problem for ANR and other coal producers is that near-term coal prices are likely to continue to decline.
Technically the recent break below the support line is a negative and threatens to send ANR into another leg down.
Although First Solar (NASDAQ:FSLR) is listed as part of the semiconductor group, this company makes and sells solar modules and photovoltaic (PV) solar power systems. Deteriorating fundamentals in First Solar and the solar industry overall, management turnover, and an oversupply of solar modules make this company and industry a poor investment.
Technically the stock recently broke under its 50-day moving average and a consolidation zone that started in December. This breakdown confirms that a new leg in its bear market is under way. Sell FSLR at market.
A weakening European economy and increased competition from Android-based smartphones and the Apple (NASDAQ:AAPL) iPhone are negatives for Nokia (NYSE:NOK). Earnings have fallen for four straight years and could fall again in 2012.
Technically Nokia’s bear market is still in force. The stock failed to penetrate its bearish resistance line in October and again in February, and is likely to break down through the support at around $5. And the MACD flashed a sell signal late in February.
Toyota Motors’ (NYSE:TM) production problems related to natural catastrophes continue. Analysts look for earnings to be limited by margin pressures, customer quality concerns, and a stronger yen.
Although longer-term prospects may improve, the recent rally from under $65 to $85 provides shareholders an excellent opportunity to sell the stock. Technically a double-top has formed following a buying climax, and the MACD indicator recently flashed a sell signal.
The downside target for TM is under its 50-day and 200-day moving averages at $74. Investors could protect current positions by either selling calls or buying puts.
Headquartered in Switzerland, UBS AG (NYSE:UBS) is a diversified financial services company that provides wealth management and investment banking services. Its global position has offered it some diversification, but it experienced losses in its investment banking division and saw major changes including the reduction of its balance sheet, risk-weighted assets, etc.
Technically its bearish resistance line at around $14 is intact, and the recent pattern of trading is called a “bearish rounding top,” suggesting that the fragile support line at around $13.80 may not hold. A break of that line would likely drop the price to its support at under $11.
United States Steel Corp. (NYSE:X) is a manufacturer of steel plate, tubular products, etc., and is dependent upon a strong world economy for success. It is one of the largest integrated steel flat roll producers in centralEurope. In addition to a weak European economy, recent increases in energy costs are a detriment to profitability. The company has had negative earnings for the past three years.
Technically a channel rally that began in October failed in February to penetrate its bearish resistance line. That failure drove the stock below its 50-day moving average and threatens to break it below the channel’s support line at $27. The MACD indicator is negative. Shareholders should either sell the stock or write calls or buy puts to protect against a possible new leg down.
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