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3 Large-Cap Stocks to Sell or Short

large-cap stocks - 3 Large-Cap Stocks to Sell or Short

Source: Shutterstock

It’s almost time to say good riddance to a challenging September. But investors shouldn’t think they’re out of the woods just yet either. Still, the good news is the following three large-cap stocks’ price charts point at profitable treats for bears on the eve of Wall Street’s most notoriously spooky month.

Following a terrific third quarter, the fourth and final quarterly period is off to an ominous but fairly typical start. With just one trading session left in September, many of investors’ favorite buy-what-you-know household favorite large-cap stocks have shown some wear and tear.

Investors taking the foot off the market’s gas pedal resulted in the venerable blue-chip Dow Jones Industrials shedding 2.25%.

And for folks other than widows and orphans and more committed to large-cap stocks with cutting-edge growth, the tech-heavy Nasdaq has unwound about 4.50%. It sounds awful.

But the other fact is Wall Street’s bellwethers are still enjoying terrific double-digit year-to-date gains after hitting record highs earlier in the month. As much, there could be room for a bit more fearful and seasonally appropriate price behavior as we enter October.

  • Facebook (NASDAQ:FB)
  • Moderna (NASDAQ:MRNA)
  • SPDR S&P 500 ETF Trust (NYSEARCA:SPY)

Today, and without giving up on a larger and bullish Roaring ’20s theme, it’s time to embrace periods when it’s better to fold ’em than hold ’em. As much and taking that one step further, here are three large-cap stocks whose price charts are warning a fairly common seasonal correction is still open for business for enterprising bears.

Large-Cap Tech Stocks to Sell: Facebook (FB)

Facebook (FB) shares prone to larger corrective cycle after finishing topping pattern
Source: Charts by TradingView

The first of our large-cap tech stocks to sell is Facebook. It’s OK to like checking in on Facebook, there’s no judgment here. Still, when it comes to owning shares of the social media giant today, I am willing to warn against it.

Technically, September’s weakness parlayed itself into a candlestick reversal pattern in FB stock. This topping formation also sports a friendly-looking breach of prior angular channel resistance and an overbought crossover that’s sure to please this large-cap stock’s bears.

Some may try to say this message about FB is fake news. I say don’t believe them!

At a minimum, hedging downside risk which could find this large-cap stock testing a support zone labeled S1 and fetching $268 to $289 in a fairly common 25% to 30% correction makes sense.

Moderna (MRNA)

Moderna (MRNA) pair of monthly shooting star candlesticks suggests the end is near for MRNA's rally
Source: Charts by TradingView

The next of our large-cap tech stocks to sell is Moderna. There’s no telling for certain whether the worst of Covid-19 is really behind us. We can only continue to act smartly and then hope it has.

But for the vaccine breakout play, the days certainly look numbered for MRNA stock bulls overstaying their welcome and regardless of second, third or yearly booster shots.

At its best, this summer’s momentum breakout produced returns in excess of 150% in less than three months for the large-cap stock. Nice.

Today though, the convinced bullish behavior has since stalled. And subsequent price discovery by MRNA investors has established a pair of shooting star candlesticks warning of lower prices ahead.

All told, I’m seeing much healthier prices for this large-cap stock to sell at a labeled S1 area of technical support, which spans from around $250 to $310.

And should MRNA deliver the goods, remember to close your ears to those warning it’s the end of days for this large-cap stock and stand ready to buy shares at a terrific-looking discount.

Large-Cap Tech Stocks to Sell: SPDR S&P 500 ETF Trust (SPY)

S&P 500 ETF (SPY) showing monthly extended bull run with topping pattern
Source: Charts by TradingView

The last of our large-cap tech stocks to sell are shares of the S&P 500 ETF. OK, so SPY is a basket of large-caps and not a single company’s ticker. But consider it a pack of stocks that’s ready to get smoked!

For those of a certain age, the slogan “you’ve come a long way, baby” from cigarette brand Virginia Slims comes to mind when looking at the extended view of SPY since 2008-2009’s financial crisis.

The campaign worked its magic on a generation or two of women before being universally panned and the product revealed to be awful for your health.

The SPY and its cadre of large-cap stocks has similar visual attributes of being ready to cycle from an extended period of mostly vibrant returns to an environment which should cause investors to feel a bit ill.

Bottom line, there’s still plenty of days left to keep the Roaring ’20s looking smart in the years to come. And I’m optimistic large-cap stocks will help with making that a reality.

At the moment, a key and confirmed candlestick topping pattern, ominous stochastics setup and steep trendline on the cusp of failing are at risk of turning into a larger correction and bear market.

How low can she go? I’d be willing to give tomorrow’s bear a cleaner bill of health in an attractive-looking support area labeled S1. Other bulls, of course, may not be breathing so easily should that become a reality.

On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


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