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The equity market is heating up and price rallies are dotted across the landscape. Given the strength, it is much easier to spot lagging large cap stocks. These lows are best avoided and could be good candidates for bearish trades. While the reasoning for each torpedoed ticker varies slightly, they all completely ignored the recent S&P500 rally. Lack of participation sends a clear signal to potential buyers: steer clear.
Another reason you should avoid the following companies is that earnings season has delivered many big winners. The number of uptrend stocks is multiplying, providing plenty of quality patterns to pursue. This leaves little room or reason for dumpster diving into names plagued by relative weakness or deteriorating fundamentals. This includes companies like the ones below.
Here are all the large-cap stocks to avoid right now:
|META||Meta Platforms, Inc.||$159.10|
|BABA||Alibaba Group Holding Limited||$89.36|
Large Cap Equities: Meta-Platforms (META)
Drawdown from Peak: -60%
META) stock chart with downtrend and impending bearish breakdown. width=”300″ height=”138″ />
Click to enlarge
Facebook parent company Metaplatforms (NASDAQ:META) slips after another quarter of disappointing results, bringing its stock price to the brink of a major technical breakdown at $155. This week’s report missed analysts’ estimates for revenue and earnings while providing an upbeat outlook for the next quarter.
Shares are down more than 6% on Thursday and testing their 52-week low. Notice that last week’s decline has arrived, as the S&P 500 surged to a new six-week high. Gross underperformance is a clear warning sign.
Meta fundamentals also paint a bleak picture. Its market capitalization has grown from nearly $1.1 trillion to $430 billion over the past year. As its ad business soured and Facebook user growth stagnated, the company pivoted by putting billions of dollars into the metaverse. So far, Wall Street is unhappy with the transition. The company reported a loss of $2.8 billion in the second quarter on its Reality Labs division, which is in charge of everything related to the metaverse.
Until we see improvement on the technical or fundamental front, Meta is an easy stock to avoid.
Drawdown from peak: -69%
BABA) stock chart with imminent support break. width=”300″ height=”138″ />
Click to enlarge
Chinese stocks rallied in May and June, but July saw the bears return with a vengeance. The reversal of fortune has not been kind to Ali Baba (NYSE:BABA), and the e-commerce juggernaut is back in a downtrend after being hammered lower in the 200-day moving average. Prices have since moved above the 50-day moving average, pushing them back into bearish territory.
The strengthening US dollar also did not help foreign equities. Rising rates have kept the greenback high and it should continue to favor domestic equities over international equities. As if to place an exclamation point on today’s mention, BABA stock is down 3%, even as the S&P 500 jumped 1.3%.
Don’t fish BABA on the bottom. You will find easier pickings elsewhere.
Newmont Corp (NEM)
Drawdown from peak: -47%
The final ugly duckling to avoid for today’s large-cap stocks is Newmont Corporation (NYSE:NMS). The gold miner was already cratering alongside his industry, but the knockout blow came during earnings. Although last week’s event was already down 41% from the highs, NEM stock was still disappointed enough to send prices down another 14% in a single session.
Shares of the Colorado-based mining giant are now trading below all major daily and weekly moving averages and have no support up to $40. This leaves more room to fall and a whole lot of resistance above to thwart recovery attempts. Like Baba, the strengthening dollar has poisoned the precious metals ecosphere. NEM is likely to stay under pressure until the male stops flexing.
As of the date of publication, Tyler Craig had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.