by Sam Collins | April 1, 2013 6:04 pm
These stocks have failed to participate in the almost unprecedented broad-based rally of Q1.The S&P 500 broke to a new closing high on the last trading day of March, confirming that the technical picture is still solidly bullish. The first-quarter gain of 11.3% for the broad-based index ranks as one of the strongest first quarters ever recorded, but it also increases the probability of a near-term consolidation or even a correction of up to 10%. Nevertheless, no year that started with a quarterly gain of over 8% has ever experienced a loss.
Stocks that were slow to participate in the almost unprecedented broad-based rally of Q1 should be culled from portfolios, since it is unlikely that they will appreciate under less-supportive conditions. Thus, our list of stocks to sell in April is populated with failed attempts to rally. It is time to release the money tied up in these losers and put it to better use. (Please see the Top Stocks to Buy for April, as well as the Trade of the Day, for stocks that should fully participate in a bull market.)
Here is our list of stocks to sell in April:
Mexican-based wireless communications giant, America Movil S.A.B. de C.V. (NYSE:AMX), has had a series of years with flat earnings. And analysts continue to project slow growth for the foreseeable future due to increasing competition in Latin America and Mexican legislation that could place restrictions on the company’s future growth prospects.
The stock had a reaction rally in March following a dramatic breakdown at $22.50 from a descending triangle when it plunged to $18.26. Note the death cross (50-day moving average crosses under 200-day moving average), a long-term bearish signal in November. Resistance is now at its 50-day moving average at $22.37.
Sell AMX at the market if you own it. Traders should place sell-short orders at $21 with a stop-loss at $24. The downside target for AMX could be under $15. Short-selling is highly speculative and not appropriate for every investor. Please consult your broker as to the ability to borrow shares and any other restrictions that may apply.
Canada-based smartphone maker, Research In Motion (NASDAQ:BBRY), is having difficulty competing in the wireless data services market. The company reported fiscal Q4 2013 earnings of $0.22 cents per share at the end of March, but it lost about 3 million subscribers during the period. And its newly introduced BB10 smartphone, which is aimed at the high end of the market, has had mixed reviews. Most analysts have expressed reservations concerning the sustainability of BBRY’s earnings and the success of its current business plan.
The stock is currently trading in a triangle with support at $13 and resistance at $16.50. Triple sell signals from our internal indicator, the Collins-Bollinger Reversal (CBR), mark the importance of the resistance line. Currently, the stock is hovering around its 50-day moving average where it has experienced resistance.
Sell BBRY short with a stop-loss order at $17.50. A breakdown of the support now at $13 should provide a target of $10.
Diebold (NYSE:DBD) provides security systems to banks, as well as government and retail markets. Restructuring and increased investment in North American markets are limiting growth. Its CEO was recently replaced, and the new management has yet to prove itself in the area of growth and earnings stabilization.
The stock is in a long-term bear market with resistance at under $31. In January, it failed to penetrate its bearish resistance line and gapped lower from $32.50 to $30.37. The recent recovery rally appears to be running into difficulty at its bearish resistance line at $30.50.
If you own DBD, sell it at the market. Short-sellers should use a stop-loss at $32.50.
Newmont Mining Corp. (NYSE:NEM) is one of the largest gold and copper producers in the world. Longer term, a rise in the price of gold should add to earnings, but short-term, precious metals are in a bear market.
A recent recovery rally from its March low of $38.50 appears to be stalling at its 50-day moving average, now at $42.10. Buying volume is declining, and so the stock doesn’t appear to have enough momentum to complete a reversal up.
The current rally provides owners of the stock a chance to sell; however, if gold prices stabilize, this stock could recover to its bearish resistance line, now at $50.
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Although Tidewater (NYSE:TDW) operates the largest fleet of offshore supply vessels serving the international energy industry, analysts consider its shares to be overvalued compared to its peers. This is due to Tidewater’s emphasis on foreign markets where the risks are much greater than in North America.
The stock has had difficulty penetrating the resistance line at $51. Three attempts have failed, and with each failure the stock has suffered a setback. Currently, it is on its fourth try at a breakout. But volume, momentum and its stochastic are indicating that this attempt, like the others, will fail.
Short sellers should enter orders at $50 or higher with a trading target of $46.
VMware (NYSE:VMW), a provider of virtualization and cloud-infrastructure solutions, has, like other cloud-based equities, not performed up to expectations. Analysts continue to favor the group, but operating earnings for 2013 are expected to be only slightly above 2012’s $2.85, with consensus estimates at $3.22 per share.
In late January, the stock suffered a major collapse as it gapped through long-term support at $82 — falling to a low of $72. Its recent recovery rally ran into trouble at just above $82 after a failed attempt to close the enormous gap at $97 to $80.
Sell VMW short at $78 or higher with a target of $65. Stop-loss orders should be entered at $86. This is a highly volatile stock, and selling it short is not appropriate for everyone.
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