3 More Dow Jones Heavyweights on the Ropes

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Earlier last week, before the market puked lower, I warned that a number of components of the Dow Jones Industrial Average were in trouble. I’m talking about stocks like Caterpillar (CAT), which dropped below multimonth support at $100. I’m talking about stocks like Exxon Mobil (XOM), which has returned to levels not seen since March.

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All of this is coming as the market drops through significant technical support levels, with the S&P 500 violating its 50-day moving average for the first time since July and the Dow Jones not far behind. Measures of market breadth are narrowing as more and more stocks succumb to the selling pressure and tip lower.

As the week progressed, more Dow Jones blue-chips fell into weakness. Here are three more to watch out for this week.

Dow Stocks to Sell: Intel (INTC)

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Intel (INTC) saw its shares storm higher earlier this year on excitement of a rebound for the beleaguered PC industry thanks to an update to the lukewarm Windows 8 from Microsoft (MSFT) as it stopped supporting its popular Windows XP OS. Other drivers included excitement over the “Internet of things” and Intel’s push to be relevant in the mobile/tablet space.

Hype has given way to reality, and shares have suffered their first downward cross of the 50-day moving average since January. Analysts at Canaccord highlighted lingering questions about Intel, including the potential for mobile growth and profitability.

I’m looking for a drop to the June/July trading range near $30, which would be a 9% drop from here. I’ve recommended the Oct $35 INTC puts to my Edge Pro subscribers, which are already up more than 30% since Sept. 23.

Dow Stocks to Sell: Cisco Systems (CSCO)

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Information technology giant Cisco Systems (CSCO) has been sliding sideways since May, tracing out a rough head-and-shoulders reversal pattern.

Investors have been growing in their skepticism over the company’s plan to move out of the increasingly pressured network hardware business and become more software-focused. Also, a slowdown in emerging-market economies isn’t going to help results going forward.

The reversal pattern traces to a price target of $23, which would fill the May price gap and result in about a 8% drop from current levels.

Dow Stocks to Sell: Disney (DIS)

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The House of Mouse has been on a tear since 2011, with Disney’s (DIS) shares pushing higher in a perfect, unbroken, 45-degree uptrend. It hasn’t even touched its 50-week moving average during this time. Pretty remarkable.

It’s been driven by the company’s successes at the box office with its Marvel franchise as well as the upcoming Star Wars VII flick, which is going to be massive.

But buyers are losing interest here as technical indicators lose strength in a way last seen back in May 2013 ahead of a five-month slide that pushed shares down more than 11%. The long-term trend is too strong to recommend any shorts or puts on DIS, but simply a recommendation to step back.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm.


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/dow-jones-sell-intc-csco-dis-stock/.

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