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2011 Is The Year Of The Broken Stocks



December 14, 2011 – Comments (0) | RELATED TICKERS: GMCR.DL , FSLR , NFLX

All of the major stock indexes topped out in early May of 2011. At that time, the S&P 500 Index traded as high as 1370.58, meanwhile, the Dow Jones Industrial Average traded as high as 12,876.00. This morning the S&P 500 Index is trading around the 1220.00 area and the Dow Jones Industrial Average is trading around the 11,910.00 level. It is safe to say that the major stock indexes have come under some serious selling pressure during the second half of 2011. The main catalyst for the market declines in 2011 is the large number of broken stocks that we have seen.

What is a broken stock? A broken stock is a stock that was a market leader and has now completely broken down and is no longer in favor by investors. The trend in these stocks has dramatically shifted from up to down and continues to look weak on the charts. While many stocks will break down from time to time this year we saw many fall from grace simultaneously. Here is the 2011 list of broken stocks.

Green Mountain Coffee Roasters Inc (NASDAQ:GMCR) topped out on September 20, 2011 at $115.97 a share. Traders and investors at that point began to distribute the stock with both hands. This morning, GMCR is trading around the $$44.60 level. The stock is trading below all of the important daily chart moving averages which put the stock in a confirmed downtrend. This stock is definitely one of the broken stocks of 2011.

Netflix Inc (NASDAQ:NFLX) could be the biggest bust of 2011. This leading video rental and streaming company topped out on July 13, 2011 at $304.79 a share. NFLX stock began a steady decline since that all time high pivot and is trading at $70.25 a share this morning. Netflix stock also trades well below the daily chart 50, and 200 moving averages, this puts the stock in a confirmed downtrend and in a weak technical position. The stock will have very good weekly chart support around the $50.00 area. We shall see if that is where it is headed in 2012.

First Solar Inc (NASDAQ:FSLR) was the most loved solar stock in the market over the past few years. In 2011 FSLR stock topped out on February 2, 2011 at $175.44 a share. This morning, FSLR stock is making a new multi-year low at $34.06 a share. Solar stocks crumbled this year after the Solyndra bankruptcy. Government subsidies for the solar industry will be much tougher to get approved. FSLR stock looks as if it may test its November 13, 2006 low of $23.50 a share. It is important to note that this date was also the first day that the stock debuted for trading.

AMR Corp (NYSE:AMR) is the parent company of American Airlines. This stock filed for Chapter 11 bankruptcy protection on November 29, 2011. The airline business faces many headwinds with high oil prices, and high labor costs. AMR Corp will emerge from bankruptcy again, however, many investors wonder how long it will take the next company in the industry to file bankruptcy.

MF Global Inc. was the biggest bust of the year. This financial stock was led by none other than Jon Corzine. He was the former U.S. Senator, Governor of New Jersey, and former CEO of Goldman Sachs Group Inc (NYSE:GS). This giant brokerage firm/hedge fund filed for bankruptcy recently. The company is coming under scrutiny by many government officials as client funds are still missing. MF Global is now gone and would certainly win the broken stock award for 2011.

Nicholas Santiago

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