The Dow Jones Industrial Average continues to dance around the 18,000 level, keeping it near the benchmark level first crossed back in December.
The bulls have been unable to clear the level definitively on a cavalcade of nagging worries: rate hikes from the Federal Reserve, a possible Greece exit from the eurozone, ongoing disappointment with the economic data.
The result has been a downward drift in measures of market breadth, reflective of the fact fewer and fewer stocks are participating to the upside.
You can see this in the uncomfortable looking declines underway in Dow Jones components like Procter & Gamble (PG) and Walmart (WMT).
Here are three more Dow Jones stocks to stay away from — or consider as short-side candidates.
Dow Jones Stocks at Risk: Boeing (BA)
Boeing (BA) shares have been drifting lower from the highs set back in February as the airline industry warns of overzealous capacity growth and contracting margins. That won’t be good for BA stock going forward.
Nor is the risk that Congress allows the charter of the U.S. Export-Import Bank, which provides subsidized financing to Boeing’s customers, to lapse at the end of the month.
I’m looking for a move down to the 200-day moving average for a decline of roughly 4% — with a risk of a return to the December low for a drop of 14%. I’ve recommended BA puts to my Edge Pro subscribers.
Dow Jones Stocks at Risk: Caterpillar (CAT)
Caterpillar (CAT) has seen its sales slide as China has slammed the brakes on fixed-asset investment and construction activity globally has slowed. The company reported in late May that its rolling three-month worldwide machine sales fell 11% in April following a 12% drop in March.
As emerging-market stocks weaken again in recent days, CAT is being pulled down in sympathy, setting up a likely test of the March-April levels near $80 — a 6% decline from here.
Dow Jones Stocks at Risk: 3M (MMM)
3M (MMM) shares have been drifting lower since reporting disappointing quarterly results in late April. The company missed Q1 earnings estimates by 8 cents (at $1.85 per share) and missed on revenues as the top-line fell 3.2%. Caterpillar noted pressure from the impact of the stronger dollar — something that is set to continue as the greenback resumes its upward climb.
MMM is slow-moving, but likely to return to its 200-day moving average for a drop of about 3%, with a risk of overshooting support at the level as it did back in October.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.
