3 Stocks to Sell, Plus 2 Bonus ETFs to Buy
| In this uncertain market, investors cannot afford to hang on to stocks that are not performing. It’s time to clean some of the garbage out of your portfolio. The current trend is down, but with the low-volume, high-volatility environment we’re in, we could see brief rallies, which give you the perfect opportunity to unload undesirable stocks. To get you started, I’ve put together a list of stocks to sell, along with two bonus ETFs to make you some bearish profits. |
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Stock to Sell #1: National Semiconductor Corp. (NSM)
National Semiconductor Corporation (NYSE: ), a major semiconductor company that focuses on analog and power management, has been consolidating around $13 since early last year. But with a recent break below $13, the stock has taken on a bearish rounding top formation. The stochastic is oversold and gave a buy signal recently, but this could provide short-sellers with an opportunity to sell the stop over $13. Holders should consider selling now.
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Stock to Sell #2: Research In Motion (RIMM)
| Wireless equipment designer and manufacturer Research In Motion Limited (NASDAQ: ) is best known for its line of BlackBerry smartphones. But lately each of its new products seems to be upstaged by the marketing of its rival Apple Inc. (NASDAQ: ). The stock appeared to be progressing nicely in an ascending triangle early this year until prices broke down in April. That sell-off turned into a broad decline with a death cross in May. RIMM managed a reaction rally in July, but it appears to have run into a wall at the 50-day moving average. It is now trading well under its 20-day moving average, plunging again immediately following the introduction of its new phone, the Torch. The stochastic is now oversold, so the stock may get a bounce. But it is likely that it will be a dead cat bounce and provide sellers another opportunity to unload RIMM.
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Stock to Sell #3: Schlumberger Limited (SLB)
| Schlumberger Limited (NYSE: ), a well-known supplier to gas and oil drillers, broke down from a bearish horn in April. A rally in July failed to break through resistance at its 200-day moving average and the stock promptly fell from $64 to under $55. This is a volatile blue chip that could rally back to its 50-day moving average where it should be sold by current holders and shorted by traders. The stochastic recently issued a buy signal, so wait for a rally to sell, or sell if SLB breaks the recent triple-bottom at $54. |
Bonus ETF #1: ProShares UltraShort Financials (SKF)
| The ProShares UltraShort Financials ETF (NYSE: ) seeks to achieve results that are twice the inverse of the daily performance of the Dow Jones U.S. Financial Index. This ETF is highly volatile. Currently trading around $23, in March 2009 it traded over $260. The recent jump through its 50-day and 200-day moving averages means that a challenge to the bearish resistance line at $24 is possible even though it recently turned away from it. Since the stochastic is overbought and SKF reversed down from resistance, try to buy this inverse ETF under $22 with a target of $26 to $28. If the broad averages break down, SKF could make a sharp breakout with $30-plus as its initial target. (Note: This leveraged ETF is only suitable for short-term trading, not long-term investing. Please check with your broker regarding possible margin restrictions.)
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Bonus ETF #2: ProShares UltraShort Semiconductors (SSG)
| The ProShares UltraShort Semiconductors (NYSE: ) seeks investment results that are twice the inverse of the daily performance of the Dow Jones U.S. Semiconductor Index. After falling from a high of over $90 in February 2009, this inverse ETF appears to be forming a solid bottom. In early May, it broke through its bearish resistance line, and for four months it has been consolidating between $15 and $20 within a channel up. A break through the top of the channel should launch SSG to the $24 to $26 zone, and that would change the long-term trend of this ETF. (Note: Leveraged ETFs are very speculative and entail unique risks over periods as short as a single day. Results can be affected substantially by compounding, and returns over longer periods will likely differ in amount and even direction. These products require active, daily monitoring and management, and are not suitable for long-term investors.
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