If there’s a best time to prune stocks to sell from your portfolio, it’s now. It’s well-documented that September is by far the worst month for stocks. Since 1924, the S&P 500 has lost an average of 1% over the course of the month. With the broader market working against you, its imperative to give yourself every extra edge you can find.
Stocks with poor technicals and seasonality are only going to weigh your portfolio down at a time when gains are already hard to come by. These are no-brainer stocks to sell. Their downward price momentum and crummy September track records don’t promise to provide any support during the toughest month of the year for equities. Indeed, they’re some of the anchors threatening to sink you.
There is no shortage of names in the S&P 500 flashing signs of technical weakness for the month of September. From poor seasonality to overbought conditions to bearish crossovers, these are the stocks to sell if you hope to escape the month with market-beating — to say nothing of positive — gains.
After screening the broader market, we chose a handful of names we consider sells on a technical basis alone.
If you want to get ahead of the market’s imminent weakness, these are the five stocks to sell for September:
Stocks to Sell — Fifth Third Bancorp (FITB)
Click to EnlargeFifth Third Bancorp (FITB) has run into a host of technical trouble recently. The regional bank stock’s 50-day moving average crossed its 200-day on the downside earlier this month, and that sell signal is still in force.
Indeed, the momentum for FITB stock is all down. FITB is 15% below its 52-week high, 1.6% below its 50-day moving average and 3.4% below its 200-day moving average. More worrisome, the stock consistently comes up against resistance at its 50-day this year.
The relative strength index of (RSI) of 74 screams overbought, and seasonality is working against FITB stock too. Historically, it loses an average of 4.3% in September, according to data from Thomson Reuters Stock Reports. That means you should throw FITB right to the top of your stocks to sell list.
Stocks to Sell — Fluor (FLR)
Click to EnlargeFluor (FLR) is another overbought stock that finds little help from its own 50-day moving average this year. True, FLR reversed course earlier in August, but the trend looks like it’s about to end, which means it’s time to put FLR on your list of stocks to sell.
FLR stock is still 10% below its 52-week high, 0.4% below its 50-day moving average and 2% below its 200-day moving average. Maybe it can break above its 50-day, but even then it likely won’t trade there for long.
The RSI stands at 68, putting it on the cusp of being overbought. And seasonality is another negative for FLR stock. Over the last 10 years, it has lost an average of 0.8% in September and another 0.3% in October.
Stocks to Sell — Mosaic (MOS)
MOS stock’s 50-day just crossed its 200-day on the way down. That movement puts the stock 7% below its 52-week high, 1% below its 50-day and 1% below its 200-day. Heck, MOS hasn’t been above its 50-day for a couple of months.
The RSI of 56 means MOS isn’t overbought … but it’s not oversold, either. Finally, this is typically a bad time of year for MOS stock. Historically, it loses an average of 1.5% in September.
Stocks to Sell — Noble Corp. (NE)
NE stock hasn’t traded above its 200-day moving average all year. It hasn’t spent much time above its 50-day moving average, either. And don’t expect that trend to change anytime soon. NE stock is 22% below its 52-week high, 1.2% below its 50-day and 3% below its 200-day.
The RSI of 68 is borderline overbought, so don’t be surprised when NE stock finds resistance at its 50-day. Seasonally, NE looks like a bad bet too, historically losing 1.3% in September and 1.1% in October.
Stocks to Sell — PulteGroup (PHM)
Click to EnlargeHomebuilders have enough problems these days, and now you can add weak technicals to at least one name. PulteGroup (PHM) stock’s 50-day moving average just crossed below its 200-day moving average — a sell signal — and it’s very overbought.
PHM stock is 12% below its 52-week high, 0.5% below its 50-day and 1% below its 200-day. The stock rallied sharply in August to narrow those gaps, but now looks poised to hit resistance at its 50-day.
With an RSI of 82, PHM has moved 12 points into overbought territory. True, a stock can stay overbought for quite some time, but the recently generated sell signal makes that unlikely here. Seasonally, PHM has lost a average of nearly 1% in September over the last 10 years.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.