Last month, I suggested that unless the bulls could overcome a day of key reversals on the major indices with a resounding rally, accompanied by solid breadth and higher volume, equities could be in trouble. What followed was a demonstration of the power of the bull. For the month of November, the Dow rose 3.5%, the S&P 500 gained 2.8%, and the Nasdaq was up 3.6%. The Dow and S&P 500 scored new all-time highs, while the Nasdaq ran to a 13-year high, all three breaking above psychologically important round numbers.
My analysis indicates that there are more new highs to be made in December, since institutional investors usually dress-up their portfolios before year-end by purchasing large-cap stocks. And this year, with blue chips lagging, that is even more likely.
However there are several big caps that should be sold. Investors should adjust their portfolios to take advantage of possible values in blue chips by selling any stock that is not achieving managements’ goals or keeping pace with an accelerating bullish trend.
Here is my list of stocks to sell in December: