U.S. equities are under pressure again on Tuesday, revisiting their Friday low amid ongoing pressure against long-term global government bonds.
The volatility has put an end to the long summer doldrums, which in turn have capped a long three-year sideways slide in stocks. With policy decisions from the Federal Reserve and the Bank of Japan due next week — along with options expiration this Friday and the first presidential debate later this month — investors have a lot to worry about.
The volatility breakout is being felt most acutely in a number of blue-chip stocks that are dropping like lead weights out of recent consolidation ranges. Here are four to avoid.
Blue-Chip Stocks to Sell: General Electric Company (GE)
General Electric Company (NYSE:GE) shares are testing below their 200-day moving average for the first time since February, as GE stock, which enjoyed a super-tight trading range from late July to early September, tumbles lower.
This is the worst selloff for the stock since last September, which in turn was the worst pullback since 2011. Investors are shaken, no doubt, as GE has been one of the steadiest gainers in the Dow Jones Industrial Average since the bull market started in 2009.
The company will next report results Oct. 21 before the bell. Analysts are looking for earnings of 33 cents per share on revenues of $30.1 billion. The breakdown is benefiting the September $31 GE options straddle recommended to Edge Pro subscribers.
Blue-Chip Stocks to Sell: Exxon Mobil Corporation (XOM)
Exxon Mobil Corporation (NYSE:XOM) shares have dropped out of a three-month trading range between $90 and $85, closing in on critical support near its 200-day moving average. The drop is connected to fresh weakness in crude oil because of the dollar’s newfound strength and the general risk-off sentiment in play right now.
As a reminder, energy stocks have far outpaced the recovery in crude oil prices since February, leaving the sector vulnerable to a correction to the downside.
The company will next report results Oct. 28 before the bell. Analysts are looking for earnings of 73 cents per share on revenues of $73.1 billion.
Blue-Chip Stocks to Sell: Home Depot Inc (HD)
Home Depot Inc (NYSE:HD) shares have dropped hard below their 200-day moving average for the first time since June, mirroring the more severe decline from February. HD seems to be falling in sympathy with homebuilder stocks on fears of a long-term bond market weakness could, which in turn, will push up mortgage rates and dampen home buying activity.
The company will next report results on Nov. 15 before the bell. Analysts are looking for earnings of $1.58 per share on revenues of $23.1 billion.
Blue-Chip Stocks to Sell: Pfizer Inc. (PFE)
Pfizer Inc. (NYSE:PFE) has dropped out of a tight two-month trading range, and is down more than 8% from its recent high, amid broad market pressure as well as specific woes for healthcare stocks. This is happening because drug makers have been under political pressure for raising prices.
Mylan NV (NASDAQ:MYL) was on the hot seat recently for raising Epipen prices, which attracted the ire of Democratic presidential hopeful Hillary Clinton. She has called for increased regulatory oversight of price hikes.
PFE will next report results on Oct. 25 before the bell. Analysts are looking for earnings of 62 cents per share on revenues of $13.1 billion.
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. As of this writing, he did not hold a position in any of the aforementioned securities.
