U.S. equities are slid lower Wednesday, the seventh day in a row that the averages opened to the downside. While large-caps are doing their best to hang tough, the small-cap stocks in the Russell 2000 have returned to levels last seen in September — capping a two-month downtrend.
Breadth remains terrible, with a “Hindenburg Omen” cluster of signals appearing as a growing list of new lows is met with a pocket of steadfast support in a handful of stocks.
Almost as if someone was trying to keep the market together by focusing on names like Amazon.com, Inc. (NASDAQ:AMZN). And credit markets continue to flash warning signals, with high-yield bonds hitting new lows this morning while long-term Treasury yields decline, further flattening the yield curve.
All this suggests the selling pressure is going to continue. If so, here are five stocks that look ready to succumb to the downside:
Shaky Stocks to Sell: Target (TGT)
Target Corporation (NYSE:TGT) took a nosedive Wednesday, cutting below its 200-day moving average to return to levels not seen since late August. That caps a near 13% decline from its mid-October high.
Investors are balking at disappointing quarterly results and a lack of confidence in management’s turnaround plans including the need for increased spending on store remodels, new hires, and lower product pricing.
The company reported quarterly earnings of five cents per share, five cents ahead of estimates, on a 1.4% rise in revenues. Forward guidance missed estimates, however, on tepid comp-store sales expectations.
Shaky Stocks to Sell: Ford (F)
Ford Motor Company (NYSE:F) shares tested below their 50-day moving average Wednesday, threatening to drop down and out of a three-month consolidation range.
While shares rallied some 20% from the mid-August low, doubts are appearing now amid worries about bloated dealer inventories and slowing demand. Doubts that had been waylaid in the aftermath of Hurricane Harvey.
The company will next report results on Jan. 25.
Analysts are looking for earnings of 45 cents per share on revenues of $36.5 billion. When the company last reported on Oct. 26, earnings of 43 cents beat estimates by 10 cents on a 0.9% rise in revenues.
Shaky Stocks to Sell: eBay (EBAY)
EBay Inc (NASDAQ:EBAY) shares tested below their 200-day moving average yesterday, a level that hasn’t been tested in more than a year, after falling more than 10% from the high set in early October.
Shares have been under pressure in the wake of the issuance of tepid forward guidance for the fourth quarter from management, casting doubt on the company’s ability to capture wallet share during the critical holiday shopping season.
The company will next report results on Jan. 24 after the close. Analysts are looking for earnings of 59 cents per share on revenues of $2.6 billion.
When the company last reported on Oct. 18, earnings of 48 cents per share were in-line with estimates on an 8.7% rise in revenues.
Shaky Stocks to Sell: Citigroup (C)
Citigroup Inc (NYSE:C) shares tested below their three-month trading range on Wednesday, threatening to return to the July-September trading range.
At the low point, the losses from the early October high nearly totaled 10% amid growing worries about a flattening yield curve — with long-term interest rates moving lower — which pressures bank sector profitability in a negative way.
The company will next report results on Jan. 16. Analysts are looking for earnings of $1.28 per share on revenues of $17.6 billion.
When the company last reported on Oct. 12, earnings of $1.42 beat estimates by 12 cents on a 2.3% rise in revenues.
Shaky Stocks to Sell: Morgan Stanley (MS)
Morgan Stanley (NYSE:MS) shares were on the verge of breaking below their mid-October reaction low yesterday, setting up a drop down to the 200-day moving average that was last tested in September.
Even with a slight recovery today, doubts are swirling that Wall Street banks will be negatively impacted by the decline in asset market volatility, hurting trading revenues as bank executives have recently warned of.
The company will next report results on Jan. 17. Analysts are looking for earnings of 81 cents per share on revenues of $9.3 billion. When the company last reported on Oct. 17, earnings of 93 cents beat estimates by 12 cents on a 3.2% rise in revenues.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
