5 Stocks to Sell in July

Get Out Before the Next Pullback

Just four days prior to the end of Q2, stocks appeared mired in a narrow band between the Dow’s major support at its 200-day moving average at 11,800 and resistance at its 20-day moving average at 12,145. Investors threatened for the third time to plunge the market through its fragile support as they appeared overwhelmed by bad news from Greece and talk that QE3 was unlikely. The media warned of another flash crash.

A 300-point rally that could knock out both the 20-day moving average and exceed the June high at about Dow 12,250 was needed to reverse the threat of a breakdown — a highly unlikely development. But as the EU’s deadline neared, it became clear that Greek lawmakers would have to settle for austerity measures, and then the U.S. economy delivered better-than-expected results. A 648-point Dow rally for the week followed, which advanced the index by 5.4%. However, volume was low with heavy short-covering, and quarter-ending pops are typically driven by institutional “window dressing.”

Investors now have an opportunity to sell stocks that rose late in the quarter but lack valuation support or have outrun their earnings potential. Long-term investors who would rather hold than sell may be able to offset some losses by writing options. Here is your list of stocks to sell for July: