On April 5, This ‘X’ Pattern Changes Everything

It appeared before Ambrx Biopharma climbed 175%... before AMC soared over 1,000%... Now, it’s appearing in multiple stocks on a regular basis. Luke Lango believes he’s cracked the code. On April 5, he’s going to reveal everything – including a free X-pattern pick.

Wed, April 5 at 4:00PM ET

3 Troubled Tech Stocks to Sell Now

  • These tech stocks should be exited or positioned short on valuation, business and stock-related concerns.
  • Snowflake (SNOW) investors should be sweating a still lofty valuation and bearish price chart.
  • International Business Machines (IBM) delivers on earnings, but confirms this tech stock is a value trap.
  • Lucid Group (LCID) heavy short interest, rich multiple and price action warn of new lows.
tech stocks to sell - 3 Troubled Tech Stocks to Sell Now

Source: Shutterstock

Despite what you’re most likely to read or hear, an emerging bull market is already underway. Yet in a market made up of stocks, which can be rightfully left to their own bearish devices, investors need to beware of select tech stocks to sell or profit from with bearish short positions.

These days headlines are owned by the Federal Reserve’s latest move on interest rates. And for good reason as regulators attempt to combat the country’s worst inflation in decades while beating back an economy on the edge of a recession.

As a forward-looking pricing mechanism though, Wall Street is already busy rebuilding lost value in many stocks impacted in 2022’s bear market cycle. A critical confirmed rally in the broader market – and one backed by a historically robust Recession Buy Indicator are – solid signs of a more positive and productive period for stocks.

Still, and even if a rising tide in risk assets continues to play out, as with any bull market, not all stocks are seaworthy vessels to buy. Today and to hedge against that type of risk, let’s explore three tech stocks to sell or short due to troubles both off and on the price chart.

Ticker Company Recent Price
SNOW Snowflake $141.22
IBM International Business Machines $129.09
LCID Lucid Group $18.25

Tech Stocks to Sell: Snowflake (SNOW)

Source: Charts by TradingView

Snowflake (NYSE:SNOW) is the first of our challenged tech stocks to sell.

Shares of SNOW melted 65% from their peak stock price of $405 set back in November. But despite the heftier correction in this 10-year old, large-cap, cloud-based data platform play, this is one instance where cheaper, even significantly less expensive, doesn’t necessarily translate into value. Not today at least.

Amid our current market environment, past greedy investor behavior of riding growth momentum to excessive levels isn’t likely to make a comeback anytime soon. As much, SNOW’s nosebleed forward earnings valuation north of 1,100, inflated PEG Ratio of nearly 5.5 and balloon-like sales multiple of 31 should remain troubling headwinds for this tech stock to sell.

The price chart in SNOW stock is also warning investors to exit or consider shorting a name which is still in dire need of bearish re-pricing.

As the illustrated reveals, after rallying off its bear market low, shares this month have a weekly inside candlestick topping pattern. With the formation also reversing back through channel and failed Fibonacci support and sporting a bearish overbought stochastics crossover, this tech stock to sell is ready to sink your teeth into.

International Business Machines (IBM)

Source: Charts by TradingView

International Business Machines (NYSE:IBM) is the next of our tech stocks to sell.

Unlike Snowflake, IBM stock needs no introduction. The tech giant has been around for more than 100 years, and its name is one of the most well-known on the planet. Also and much different from SNOW, this tech stock isn’t guilty of sinfully prone financials that require dubious valuations to make a comeback.

Nevertheless, IBM is still a tech stock to sell right now.

In our estimation, IBM’s below-market and forward sub 14 P/E, very reasonable sales multiple of 2.30 and dividend of more than 5% have the earmarks of a value trap. This became more certain following last week’s earnings.

In the face of the outfit’s top and bottom-line beat and delivering sales growth of more than 9%, its strongest in a decade, the venerable blue-chip’s shares sunk more than 5% tied to concern over a reduction in IBM stock’s cash flow forecast.

Apparently you can’t please all the people all the time. At a minimum, there’s obviously no pleasing the long-term shareholders in this tech stock to sell, as the stock reaction completely ruined June’s 10-plus year base breakout. And that sizable technical failure isn’t worth the likely trouble for investors.

Lucid Group (LCID)

Source: Charts by TradingView

Lucid Group (NASDAQ:LCID) is the last of our tech stocks to sell.

Shares of LCID have come a long way from their SPAC and EV-driven frenzied highs back in February and November of last year. At today’s market price of around $18.50, this tech play has lost between 67% to 70% of its value.

But despite Lucid trading for about a third of what it once fetched and the upstart admirably putting its high-end electric vehicles rubber to the road this past fall, heavy short interest of 23%, a still very rich $32 billion valuation with much to prove before the possibility of profits, as well as bearish price action warn of new lows.

Technically, this week shares confirmed a weekly chart topping pattern set against zone resistance and further backed by a bearish overbought stochastics signal. Should those shorts get a bit more feisty, and their bullish passengers slightly more agitated, a move toward – and even through – $10 shouldn’t be dismissed.

At a minimum though, misery might like company. But when it comes to this tech stock to sell there’s no reason to join them by hanging on long and wrong.

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.

The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.

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