5 Blue-Chip Stocks Facing a Death Cross

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The rebound is here. And there has been much rejoicing as U.S. stocks have put together the best bounce-back in years.

warning tapeBut the evidence suggests that despite hopes of a face-ripping, V-shaped rally, this is a prototypical “dead cat” bounce and should be treated with skepticism.

In the 48 hours following Tuesday’s late-session meltdown to new lows, the Federal Reserve has aggressively moved in to calm nerves and elevate stock prices — proving once again that equity prices are a key concern (despite insistence that policy is set based on economic data alone).

The S&P 500 is on the verge of its first “Death Cross” — a move by the 50-day moving average below the 200-day — since 2011. This is a sign of a clear deterioration in the market’s medium-term trend strength. The Dow Jones Industrial Average suffered a death cross earlier this month.

This weakness is reflective of a growing number of individual stocks entering downtrends, creating new selling opportunities. Here are five blue-chip stocks to avoid or to consider on the short side as they suffer, or are about to suffer, death crosses of their own.

Blue-Chip Stocks Hit by a Death Cross: Apple (AAPL)

Apple stock chart death crossApple (AAPL) has been under pressure since reporting weaker-than-expected iPhone shipments and disappointing China sales in late July.

Stocks have been bouncing this week, but pushing Apple around was an email reportedly from CEO Tim Cook that was sent to and read on air by CNBC’s Jim Cramer — the letter was talking up recent improvement in Chinese sales.

The company has a big product unveiling event scheduled for Sept. 9, ostensibly to launch the iPhone 6s and new iPad models. With the company’s product innovation cycle slowing, the odds of disappointment are high.

Edge Pro subscribers nabbed a 213% gain trading puts against AAPL back in July.

Blue-Chip Stocks Hit by a Death Cross: Cisco (CSCO)

Cisco csco death crossCisco (CSCO) has been on the slide since Morgan Stanley analysts downgraded the stock on Aug. 17 — despite Cisco reporting better-than-expected earnings on Aug. 13.

Concerns are centered on Cisco’s emerging-market exposure.

Blue-Chip Stocks Hit by a Death Cross: Dow Chemical (DOW)

Blue-Chip Stocks Hit by a Death Cross: Dow Chemical (DOW)Dow Chemical (DOW) shares are suffering their worst breakdown since 2011, falling below a two-year support level near $42.

On Monday, the stock flash crashed down to a low of $35 — a level it will likely revisit before rebounding.

Blue-Chip Stocks Hit by a Death Cross: Tiffany & Co. (TIF)

Blue-Chip Stocks Hit by a Death Cross: Tiffany & Co. (TIF)Tiffany & Co. (TIF) is getting hit on Thursday after reporting weaker-than-expected earnings and revenue for the second quarter and lowered forward guidance. Problems include the stronger dollar and a slowdown in tourist spending in the Americas.

Blue-Chip Stocks Hit by a Death Cross: Boeing (BA)

Blue-Chip Stocks Hit by a Death Cross: Boeing (BA)Boeing (BA) was slammed out of its year-long trading range last week, falling under critical support at the 200-day moving average, to return to support from the 2013-14 trading range near $125.

I’m targeting a return to October lows near $116.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/08/blue-chip-stocks-death-cross/.

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