Buyers are jamming the market higher into year-end. Trade war progress, seasonality and price-driven momentum are being taken full advantage of — but not by all! Some companies have seen their shares left behind as the great bull market rolls one. So today, we’ll look at some of the best stocks to sell before heading into 2020.
It says something about your stock if while the rest of the market is courting record highs, yours is flirting with 52-week lows.
The absolute and relative weakness is a warning sign. And, while it doesn’t have to portend terrible performance to come, it certainly doesn’t provide much confidence about the stock’s prospect for the near future.
Sure, it might turn the corner in 2020, but let’s focus on what is — not what might be.
With that in mind, here are three stocks to sell that are limping into year-end.
Stocks to Sell Before 2020: FedEx (FDX)
On an absolute basis, FedEx (NYSE:FDX) shares’ performance for 2019 hasn’t been that bad. At just over $150, it’s only down nearly 7% year-to-date (YTD). But when looking at its price chart and its relative performance, things start to turn ugly.
On the charting front, every single recovery attempt has been ultimately upended. The descending 200-day moving average has snuffed out three of them single-handedly. And with this month’s earnings report resulting in a large down gap that sank FDX stock back below its 50-day and 20-day moving averages, I see little reason for optimism here.
The S&P 500 is ending the year up just shy of 30%. With such a bullish backdrop, seeing your stock fall even 5% is terrible, terrible relative performance. With that lens, FDX looks big-league bad.
The Trade: Buy the Feb $150/$140 bear put spread for $3.
Zoom Video Communications (ZM)
Since its April IPO, Zoom Video Communications (NASDAQ:ZM) has taken shareholders on quite the wild ride. After almost doubling in the first two months, ZM proceeded to give back nearly all of its gains. It’s now limping into year-end close to its IPO price.
So, because of the multi-month dismantling, ZM stock now finds itself submerged beneath its 50-day moving average and right near its 20-day moving average.
The recent earnings report didn’t help matters much, as it resulted in a down gap that accelerated the decent. With ZM stuck at overhead resistance, it is vulnerable to fresh weakness and could see a return toward $61 in the coming weeks.
The Trade: Buy the Feb $65/$60 bear put spread for $1.85.
Veeva Systems (VEEV)
The long-term trend in Veeva Systems (NYSE:VEEV) has been extremely bullish, but weakness is emerging in the daily direction placing VEEV stock on shaky footing heading into 2020.
Given the bullish backdrop for tech stocks, the persistent decline in VEEV since July is concerning. The past two earnings announcements have been unable to pull VEEV out of the downward spiral, and as I type, the stock is knocking on the door of a critical support zone at $140.
Its failure should give way to the next downswing, and now is the time to prepare bearish plays.
The Trade: Buy the Feb $140/$130 bear put spread for $3.85.
As of this writing, Tyler Craig held bearish positions in FDX. For a free trial to the best trading community on the planet and Tyler’s current home, click here!