Earnings reports started strong, but then stalled. About 60% of the S&P 500’s stocks have exceeded objectives — but many of the objectives had already been lowered.
With a new socialist government in France and turmoil in Greece, the Europeans have their hands full, and that means that the world economy is in jeopardy of recession.
Technically, warning flags are flying after breakdowns in the short-term and intermediate-term trends of the S&P 500 and Nasdaq.
It may not be time to “sell in May and go away,” but it is time to sell in May and wait for a better opportunity to enter the market since the technical picture is weak.
Here is our list of stocks to sell in May:
Stock to Sell #1 – Applied Materials (AMAT)
Applied Materials (NASDAQ:AMAT), the world’s largest maker of wafer fabrication equipment for the semiconductor industry, broke through its 200-day moving average and support line as sellers accumulated.
The company’s earnings have been mediocre with FY 2012 estimated at 84 cents, down from $1.30.
The stock has an immediate downside target of $10.50, but further market weakness could drop it to under $10.
Stock to Sell #2 – Deutsche Bank AG (NYSE:DB)
Global securities and bank holding company Deutsche Bank AG (NYSE:DB), which is headquartered in Germany, recently had its earnings downgraded by Wall Street analysts as conditions worsen in the euro zone.
Technically the stock completed a dreaded head-and-shoulders top on May 2, as it broke the neckline at $42.50. Since the high at the head of the formation is at $52, the approximate target for the breakdown is $32, where the stock found support in September.
Stock to Sell #3 – Genuine Parts (GPC)
Genuine Parts (NYSE:GPC), a leading distributor of wholesale automotive parts, is struggling to maintain its technical pattern. A double-top appears to be forming and is reinforced by the falloff in volume at just above $66.
The company recently reported slightly better-than-expected earnings, but the stock failed to have a follow-through in price. If it does not make a new high soon, GPC could break support at its 50-day moving average and plunge to around $58.
Stock to Sell #4 – SPDR Gold Shares (GLD)
The SPDR Gold Shares (NYSE:GLD) seeks to replicate the price of gold bullion, net of expenses, and is very accurate in its pricing to gold since it is the only exchange-traded fund (ETF) that holds physical gold.
GLD rose from around $120 to over $188 last year, but since the double-top of August/September, the trend has flattened with support at about $157 and resistance at $165. The chart flashed a “death cross” in mid-April, along with a sell signal from the stochastic. A break under $156 could drive GLD to $146.
Stock to Sell #5 – Juniper Networks (JNPR)
Juniper Networks (NYSE:JNPR), a provider of Internet protocol (IP) networking products, had a strong earnings report in 2010, but expects a decline in earnings this year and a continued slowing of sales. An unfavorable product mix seems to be at the core of the company’s problems.
Insiders have been strong sellers of the stock, and JNPR has fallen from over $45 in January 2011 to a current price of under $20. The recent new breakdown from a rectangle, preceded by a sell from the stochastic, renders a downside price target of $15.
Stock to Sell #6 –St.Jude Medical (STJ)
St. Jude Medical (NYSE:STJ), a maker of cardiovascular medical devices, struggles with earnings. In 2012, it is expected to earn $3.50 per share, up from $2.52, but it has a history of earnings disappointments and its chart is negative.
The stock failed to hold above its 200-day moving average in Q1, and its 20-day moving average broke its 50-day and 200-day moving averages. Distribution volume has been high and the stochastic recently issued a sell signal. The downside target for STJ is $33.