4 Dow Jones Stocks That Could Slide Into the Gutter

Investors likely have a lot of other things on their minds these days. Between holiday travel, Black Friday and Cyber Monday promotions, and NFL playoff hopes, the stock market is probably way down on the list by virtue of its recent stability.

4 Dow Jones Stocks That Could Slide Into the Gutter

Large caps just haven’t moved much lately after a violent up-and-down between August and October. But that could be a problem.

The Dow Jones Industrial Average nearly tagged the 18,000 level at the start of the month before drifting lower. For the month, the index gained just 56 points, or just three-tenths of a percent. Over the last seven trading days, the index is basically unchanged after holding near the 17,800 level.

According to Jason Goepfert at SentimenTrader, the quietness in large-cap stocks has reached the point typically preceding market weakness over the past two years. In other words, this is the calm before the storm.

Signs of stress are just below the surface tranquility: Consider how the number of NYSE stocks above their 50-day moving average (a measure of breadth) has dropped sharply in November despite the relative stability of the Dow Jones. That’s why I continue to recommend a defensive positioning to Edge subscribers.

That’s not exactly a picture of health since it reflects narrowing interest by stock buyers. What’s worse is that a number of Dow Jones stocks that have held the index aloft look vulnerable. Here are four to watch out for.

Dow Jones Stocks to Watch: DuPont (DD)

 Dow Jones Stocks to Watch: DuPont (DD)DuPont (DD) stock has enjoyed a nice, steady rise out of its October low, rising some $20 a share, or around 40% in just two months. But shares have spent most of November consolidating near $67.50 — resistance from the April-May gap moves — as buyers lose enthusiasm at these levels.

With the stochastic indicator deep in overbought territory and weakening, now’s the time to sell or consider short/put option positions, as the stock looks ready to break below its 20-day moving average for the first time in months.

 

Dow Jones Stocks to Watch: Walt Disney (DIS)

 Dow Jones Stocks to Watch: Walt Disney (DIS)Disney (DIS) stock has rallied some 20% out of its October low as hype builds for the upcoming Star Wars sequel and the holiday merchandising season. But after shares hit resistance from its July-August highs, sellers have slammed prices back below the 20-day moving average for the first time since late September.

With the stochastic indicator deep in overbought territory and weakening, now’s the time to sell or consider short/put option positions.

Dow Jones Stocks to Watch: General Electric (GE)

 Dow Jones Stocks to Watch: General Electric (GE)General Electric (GE), like DD above, ripped higher out of its September-October low but has spent most of the past month consolidating near recent highs.

The 20%-plus rise was nothing to sneeze at, but it appears it’s at its end. On Monday, shares dropped below their 20-day moving average for the first time since late September in violation of its two-month uptrend.

With the stochastic indicator dropping down out of overbought territory, now’s the time to sell or consider short/put option positions.

Dow Jones Stocks to Watch: 3M (MMM)

 Dow Jones Stocks to Watch: 3M (MMM)3M (MMM) climbed more than 16% from its October low to its November high — but has been stalled near $157.50 for more than a month. Now, for the first time since March, the stochastic indicator is dropping out of overbought territory in what’s now a confirmed sell signal.

With the 20-day moving average lost, shares are heading for the next critical level of support at the 200-day moving average. A break of that level would put the 50-day average in play — about 3.4% below current levels.

If you’re long, now’s the time to book profits.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/12/dow-jones-stocks-dd-dis-ge-mmm/.

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