The bulls are watching in horror as 2016 gets off to a terrible start.
The Dow Jones Industrial Average sliced below the 17,000 level in intraday trading on Wednesday, returning to its early October lows due to market turmoil and economic weakness in China as well as saber rattling by North Korea.
Pyongyang claimed it detonated a miniaturized hydrogen bomb overnight, adding to already substantial geopolitical concerns (Iran vs. Saudi Arabia, for one).
Other concerns include the specter of additional Federal Reserve interest rate hikes this year, weak U.S. economic data, a fresh breakdown in crude oil to the $34-a-barrel handle on inventory worries and the approach of sure-to-be-disappointing fourth-quarter earnings season on Jan. 11.
Throughout 2015, the bulls relied in a narrowing group of large-cap stocks to hold the major averages aloft. Now that the selling has become a flood, many popular and widely held issues are getting washed away.
Here are seven to avoid or consider as short plays.
Bombed-Out Blue Chips: Apple Inc. (AAPL)
Concerns over iPhone demand — with Nikkei reporting a 30% production cut in the current quarter for the iPhone 6s models — and a slowdown in product innovation has investors abandoning Apple (AAPL) shares.
The fall from grace has been severe for the onetime tech sweetheart, which is now down some 25% from its early 2015 highs. That’s fantastic news for the Jan $110 puts recommended to Edge Pro subscribers back on Dec. 17 — they’re carrying a gain of more than 265%.
The company will report results on Jan. 26 after the close, with analysts looking for earnings of $3.25 per share on revenues of $77.1 billion.
AAPL stock is off by nearly 5% for the year-to-date.
Bombed-Out Blue Chips: Intel Corporation (INTC)
Enthusiasm, however, is waning as the launch of Windows 10 failed to generate much excitement in the PC industry, while the rise of the Internet of Things will shift down average selling prices and margins.
The company will next report results on Jan. 14 after the close. Analysts are looking for earnings of 63 cents per share on revenues of $14.8 billion.
INTC is down 4.5% for the year so far.
Bombed-Out Blue Chips: Amazon.com, Inc. (AMZN)
Amazon (AMZN) sliced below its 50-day moving average for the first time since late September dropping out of a trading range that’s been in place since November. With the holiday shopping season behind us, investors are apparently worried actual results could fall short of the sky-high expectations.
Amazon stock is down 7% for the year so far. We’ll know more when the company reports results on Jan. 28 after the close, where the Wall Street community is looking for earnings of $1.60 per share on revenues of $35.9 billion.
AMZN is currently down 7% for the year.
Bombed-Out Blue Chips: Bank of America Corp (BAC)
Bank of America (BAC) shares, along with much of the financial sector, are being hit by concerns over rising financial market volatility in the New Year. That will impact investment banking revenue by hitting equity trading margins as well as results from Wall Street’s fixed income, commodities and currency divisions.
The decline has been great news for Edge Pro subscribers carrying a 191% gain in their Jan $17 BAC puts since they were first recommended on Dec. 31.
We’ll know more when the company next releases results on Jan. 19 before the bell, as analysts patiently hope to check off their consensus of 31 cents per share on $20.6 billion in revenue.
BAC stock is down 4.6% for the year so far.
Bombed-Out Blue Chips: Yahoo! Inc. (YHOO)
Beleaguered Internet icon Yahoo (YHOO) has suffered a loss of faith since peaking in late 2014 as excitement and media buzz for CEO Marissa Mayer has given way to discontent and a possible management shakeup. Shares have broken down below their three-month trading range and are threatening a return to their late September lows.
The stock is down 3.5% for the year so far — we’ll know more when the company next report results on Jan. 26 after the close on expectations for 13 cents per share on $948 million in revenue.
As of this writing, YHOO stock is down 3.5% for the year.
Bombed-Out Blue Chips: General Motors Company (GM)
General Motors (GM) shares are breaking below its 200-day moving average and losing a three-month consolidation range near its 2015 summertime highs — evidence the U.S. auto sales boom could be peaking.
December sales showed a 17.2 to 17.4 million seasonally adjusted annualized rate, below the 18.1 million expected (which would’ve been the first ever four-month streak above the 18-million level ever).
We’ll know more when the company reports results on Feb. 3 before the bell, either beating, meeting or disappointing the per-share consensus of $1.17 on revenues of $37.6 billion.
As of now, General Motors stock is off 8% this year.
Bombed-Out Blue Chips: Walt Disney Co (DIS)
Disney (DIS) shares are succumbing to fresh selling pressure after bonking at overhead resistance — threatening to end the powerful uptrend that’s been in place since late 2011 that quadrupled the stock price into the double-top high set in August and November.
This could reflect some “sell the news” behavior on the release of Star Wars: The Force Awakens, as well as lingering “cord cutting” concerns for its television business.
We’ll know more when Disney reports results on Feb. 9 after the bell. Analysts are expecting $1.44 per share on revenues of $14.8 billion.
Disney stock is currently eating a 4.6% loss for the year so far.