Technical analysis involves looking at a stock’s chart to try and determine which direction the stock is headed based solely on its recent trend.
You can use technical analysis to spot stocks that are about to break out to the upside, and you can also use it to spot stocks that are in danger of losing value in the near future.
Technical analysis does not take into consideration any underlying fundamentals of a stock; it simply looks at recent trends, and uses those trends to predict future action.
The beauty of technical analysis is that the information is changing in real-time. Fundamental analysis is delayed information, and by the time the information is made available it is sometimes too late to react to the news.
There is a lot of uncertainty in the market at this time. President Trump’s first three months in office have been anything but smooth, and his recent failure to repeal and replace Obamacare has created doubt on his ability to accomplish tax reform, which has been a driving force on Wall Street. There is also uncertainty on the speed in which the Federal Reserve will lift interest rates.
As we head into the upcoming earnings season, there is a risk of a market selloff if we start to see a string of disappointing quarterly numbers. If you are worried about the market’s ability to hold on to its recent gains, you want to take a minute to look over the stocks in your portfolio, and make sure the technicals support holding on to the positions.
Let’s take a look at five stocks whose technicals are telling investors to sell at this point.