6 Top Stocks to Sell in September

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A Rough Month Ahead for Investors

September entered like a bear with a three-day selling spree that pummeled the S&P 500 to its worst September start in history, off 4.4%. And while stocks bounced back today as worries about European debt eased, there have been few positive changes in the U.S.and European economic and political arenas, and the same old technical problems seem to haunt the bulls.

The market has turned down from the enormous resistance formed over a seven-month period with a bearish daily reversal from the Dow Jones Industrial Average, and the S&P 500 is in the process of forming what appears to be a bearish flag. Dow Theory has confirmed a bear market, and all of the major indices have flashed a death cross.

The markets are likely to rally back to their bearish resistance lines at S&P 500 1,240 and Dow 11,670, but the trend is decidedly down. Don’t be deceived by temporary market strength; sell into it instead.

Here is our list of stocks to sell in September:

Stock to Sell #1 – Gap Inc. (GPS)

Specialty retailer Gap Inc. (NYSE:GPS) reported a 6% decline in same-store sales for the month of August. Every segment of its business was impacted, and it saw a 4% decline in Old Navy and Banana Republic.

The stock has fallen from $23 to under $16 since May, and in June flashed a death cross. In late August, the stochastic went negative, threatening to break to new lows under $15 with a target at the bottom of its current bear channel at around $12. Insiders have been sellers of the stock.

NYSE:GPS

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Stock to Sell #2 – Google (GOOG)

Google (NASDAQ:GOOG) may see a slowdown in net profits in 2012 due to costs from recent acquisitions and a slowing economy. On the long-term charts, GOOG broke down from a huge triangle and a death cross. Major support is around $480 and a break of that line could lead to a big decline.

The stock appears to be picking up sellers and the stochastic is close to issuing a sell signal. Traders could sell short now with a target under $500. Longer-term holders should enter a stop-loss order at $470.

NASDAQ:GOOG

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Stock to Sell #3 – Lockheed Martin Corp. (LMT)

Lockheed Martin Corp. (NYSE:LMT) is the largest beneficiary of U.S. Department of Defense contracts in 2010, thus the government’s plan to cut this type of spending should hurt LMT. Several research firms have downgraded the stock recently due to rising operating costs and various international difficulties.

The stock fell to its major support at $68 in August, then bounced to just under its 50-day moving average before reversing on a gap down, which triggered a sell signal from the stochastic. The stock appears headed lower for another test of the support line at $68. A break of that line would indicate that LMT is headed for a major decline.

NYSE:LMT

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Stock to Sell #4 – Netflix (NFLX)

Netflix (NASDAQ:NFLX) is in danger of losing market share to other streaming video services. Its recent loss of Starz and a new pricing policy have yet to demonstrate that NFLX can maintain its high-profile growth record.

Technically it broke its 200-day moving average and bullish support line, and on Sept. 1, gapped down on what appears to be a breakaway gap. Selling has picked up recently and the stochastic flashed a sell signal. The downside target is somewhere between $140 and $180. Sell into strength.

NASDAQ:NFLX

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Stock to Sell #5 – Transocean Ltd. (RIG)

Transocean Ltd. (NYSE:RIG), an international provider of offshore contract drilling services, broke from a head-and-shoulders top in April. The stock plunged below its 200-day moving average at $70, but attempted to consolidate between $65 and $60. That attempt failed when the company reported bleak Q2 results, which were hurt by a decline in utilization rates, lower backlog and higher operating costs.

The stock is gapping down under heavy selling pressure. Traders should sell short since the support at the double-bottom at $50 is very fragile. If it breaks, there is little support until the mid-$40s.

NYSE:RIG

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Stock to Sell #6 – Taiwan Semiconductor Manufacturing Co. (TSM)

Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is the world’s largest dedicated semiconductor foundry, but with a worldwide economic slowdown, demand for semiconductors is expected to decline. Therefore, in early August, this highly cyclical company had its rating reduced by several analysts.

The rating cuts drove TSM down through a crucial support line at $12 and confirmed a breakdown from a double-top at $14. The target for the breakdown is $9 to $10. The stock’s recent bounce to $12 resulted in a reversal from the 50-day moving average line and an excellent opportunity to sell the stock or short it. The downside target is under $10.

NYSE:TSM

 

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Article printed from InvestorPlace Media, https://investorplace.com/2011/09/top-stocks-to-sell-gps-goog-lmt-nflx-rig-tsm/.

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