It sure wasn’t hard to find stocks to sell in September. October might be a little more challenging.
After all, stocks are set to close out the historically worst month for stocks in typical fashion. If current levels hold, the S&P 500 will end September with a loss of a little more than 1%, which is essentially in line with the average monthly performance going back to 1924.
October is a significantly better month for equities, but it’s hardly a blowout. On average, the market gains just 0.4% over the course of the month. The bar for outperformance may be low, but — as always — stock selection is key if you have any hope of outperforming the market. Fortunately, technical analysis can help us zero in on stocks to sell, lest they weigh on returns.
Seasonality is one important technical to consider. Any member of the S&P 500 that historically underperforms in October makes our list of stocks to sell. Little or no price momentum — or price momentum to the downside — as evidenced by deteriorating moving averages and relative strength readings are candidates, too.
After sifting through the S&P 500 for names set to weigh on already weak gains in October, we came up with a number of stocks to sell based on weak technicals. If you have any hope of beating the broader market this month, these are the stocks to sell:
Stocks to Sell: AutoNation (AN)
Click to Enlarge AutoNation (AN) has a technical chart that’s just a heap of trouble. Shares crossed below their 50-day moving average months ago and now they’ve pierced their 200-day moving average, too. Even more worrisome is that AN stock is oh-so-close to carving out a death cross. Sell signals abound.
Indeed, AN stock is 20% below its 52-week high, 9.4% below its 50-day, and 9% below its 200-day moving average.
With a relative strength indicator (RSI) of 14, some might argue AN stock is set for a bounce on deeply oversold conditions, but that won’t happen as long as that death cross keeps closing in.
Seasonality isn’t doing AN stock any favors, either. Over the last 10 years, AN stock loses an average of 3.4% in the month of October, according to data from Thomson Reuters Stock Reports.
Stocks to Sell: Avon Products (AVP)
Click to Enlarge Avon Products (AVP) is another screaming sell on the technicals. AVP’s 50-day moving average has been stuck below its 200-day moving average for almost a year now. There’s just no positive momentum in this stock to speak of.
The RSI of 36 isn’t in oversold territory, and that wouldn’t matter anyway. AVP stock loves to fall into oversold territory without getting any upside momentum in the share price. At the same time, AVP stock is 43% below its 52-week high, 4% below its 50-day moving average and 11% below its 200-day moving average.
AVP shares are currently trading 3.6% below their 50-day moving average of 13.64, and 10.5% below their 200-day moving average of 14.69.
As for seasonality, it’s just brutal for AVP in October, losing an average of 7.7% over the last 10 years.
No reason to stick with this one. Throw AVP on your stocks to sell list.
Stocks to Sell: Mattel (MAT)
Click to Enlarge Mattel (MAT) has been suffering with ugly technicals for most of the year, and there’s no reason to pick it up now. MAT stock made a death cross back in February and has been pretty much a stinker ever since.
MAT is now 33% below its 52-week high and 8% below its 50-day moving average. It’s also 17% below its 200-day moving average, but then it hasn’t been in spitting distance of that level since January.
Again, with a RSI of 20, some might think MAT stock is due for a bounce on oversold conditions, but don’t bet on it. The stock has been oversold before without enjoying any kind of subsequent upside.
Seasonality isn’t a killer for MAT stock, but it’s not favorable either. Shares lost and average on 0.8% in October over the past 10 years.
Stocks to Sell: Mylan (MYL)
Click to Enlarge Mylan (MYL) stock looks like it’s about to carve out a death cross, with the 50-day moving average preparing to pass the 200-day moving average on the way down.
That sell signal isn’t exactly a big surprise. Mylan stock is almost 20% below its 52-week high, 4% below its 50-day and 4% below its 200-day moving average. Heck, MYL fell below its 50-day back in August and it just took out its 200-day — again.
There’s no upside momentum to be found in MYL’s RSI either, At more than 40, it’s neither overbought nor oversold.
Seasonality is another piece of the downside momentum case against MYL. It has lost an average of 0.6% in October over the last decade.
Stocks to Sell: Tyson (TSN)
Click to Enlarge Tyson (TSN) has a chart piled with sell signals and more downside to come. TSN stock just broke through both its 50-day and 200-day moving averages. At the same time, the 50-day made a death cross below the 200-day.
Everything else seems to be lining up against TSN stock, too. It’s 16% below its 52-week high, 2% below its 50-day moving average and 3% below its 200-day moving average. There’s no upside price momentum here.
The RSI of 43 means nothing for TSN stock. At 43, shares are neither overbought nor oversold.
Finally, TSN stock is a stinker in October. Or at least it has been. Over the last ten years, TSN lost an average of 4.4% over the course of the month.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
