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Sell and Sell Aggressively, Says Carter Worth

February 19, 2013 1:02 PM EST Send to a Friend
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Considering the meteoric rise in stocks since November, equities are looking less and less like a promising prize fighter and more and more like an over-the-hill boxer waiting to get punched senseless and crash into the canvas, according to many on Wall Street. With this in mind, many are cautioning investors to square long positions. Others like Oppenheimer Chief Market Technician Carter Worth think investors should sell, and and sell aggressively.

"Does one hang around? Or maybe one buys even more stock? Not us. Indeed, not only would we not hang around, we would be selling aggressively into the market's current strength," wrote the technician in his latest issue of his 'Money In Motion' report.

The concern, from Worth's perspective, is the steep angle of the S&P 500, which has been in rally mode for months. The exact angle of the ascent is 57 percent. This is too steep for comfort and will result in correction once the market runs out of energy.

"The current 57 degree angle is very very similar to the angle on which the market climbed during the prior two intermediate advances of the past year and a half... steep, uncorrected advances that gave way to declines of 11% and 9% respectively," said Worth.

Investors hoping to buy-in on the idea, or sell-in, as it were, should short extreme winners and losers.

"As to the former (extreme winners) there are an increasing number of stocks whose day-to-day and week-over- week angles are steep, uncorrected and unsustainable—by our work. As to the latter (extreme losers) any stock that has not found sponsorship over the past three months during the market's November 16 to February 15 intermediate advance is - presumptively - sick. Something must be wrong," he said.

Worth published an extensive list of stocks on that fit into each category. Interesting names on list #1 include: Cree, Inc. (Nasdaq: CREE), Goldman Sachs (NYSE: GS), Lowe's (NYSE: LOW), Netflix, Inc. (Nasdaq: NFLX), and Time Warner Inc. (NYSE: TWX).

Interesting names on list #2 include: American Eagle Outfitters (NYSE: AEO), Amgen Inc. (Nasdaq: AMGN), Bed Bath & Beyond Inc. (Nasdaq: BBBY), The Coca-Cola Company (NYSE: KO), Dollar Tree, Inc. (Nasdaq: DLTR), Exxon Mobil Corporation (NYSE: XOM), Intel Corporation (Nasdaq: INTC), Kohl's Corp. (NYSE: KSS), Lululemon Athletica Inc. (Nasdaq: LULU), Monster Beverage (Nasdaq: MNST), Sears Holdings Corporation (Nasdaq: SHLD),and Target Corp. (NYSE: TGT).




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