The bulls have spent the last two weeks trying to get the Dow Jones Industrial Average above the 20,000 threshold for the first time ever. While a lift up and over the benchmark is likely before the end of the year — due to light trading volumes and positive seasonality alone — a growing number of stocks are rolling over as measures of overall market breadth deteriorate.
I believe this is setting the stage for some disappointment in January, which has traditionally been the site of selling pressure over the last 10 years as the post-holiday blues set in.
Heading into 2017, the stakes couldn’t be higher. And I believe investors are setting themselves up for some disappointment given heightened expectations for the incoming Trump Administration, a blasé attitude towards Federal Reserve interest rate hikes, and the risk of financial market turbulence from emerging market economies suffering from the stronger dollar.
With that as a backdrop, here are four Dow Jones components that look vulnerable.
Dow Jones Stocks at Risk: Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) — like many defensive yield-sensitive stocks — has been left behind in recent months as long-term interest rates have drifted higher and investors shifted their focus to cyclical, economically sensitive stocks in areas like industrials and energy. As a result, JNJ is once again testing below its 200-day moving average in trading on Thursday.
The company will report results on Jan. 24 before the bell. Analysts are looking for earnings of $1.56 per share of JNJ on revenues of $18.3 billion.
Dow Jones Stocks at Risk: The Coca-Cola Co (KO)
The Coca-Cola Co (NYSE:KO) shares have languished, falling roughly 10% from their summertime highs as the broad market has rallied to new records. KO stock is threatening to drop back below its 50-day moving average in the wake of downgrades from analysts at Morgan Stanley and Deutsche Bank this month.
KO will next report results on Feb. 7 before the bell. Analysts are looking for earnings 36 cents per share on revenues of $9.2 billion.
Dow Jones Stocks at Risk: Wal-Mart Stores, Inc. (WMT)
Wal-Mart Stores, Inc. (NYSE:WMT) shares have dropped back below their 200-day moving average, putting its three-month uptrend support at risk. Not only could this be an early indication of disappointment with the 2016 holiday shopping season, but there is concern a possible “border adjustment tax” supported by president-elect Trump and Congressional Republicans would increase the tax on imported goods, hitting retailers like WMT hard.
The company will next report results on Feb. 21 before the bell. Analysts are looking for earnings of $1.29 per share of WMT on revenues of $130.5 billion.
Dow Jones Stocks at Risk: Procter & Gamble Co (PG)
Procter & Gamble Co (NYSE:PG) shares have badly lagged the market’s post-election surge as yield-sensitives in general have been hammered by the backup in yields. PG shares have also been pressured by a series of analyst downgrades over the last couple of weeks, with downcast notes from Deutsche Bank, Stifel and SunTrust. Stifel analysts highlighted headwinds including cost inflation, FX movements and geopolitical uncertainty for PG.
The company will next report results on Jan. 25 before the bell. Analysts are looking for earnings of $1.07 per share of PG on revenues of $16.9 billion.