JPMorgan reveals 9 stocks with major problems originally appeared on TheStreet.
It’s easy to get caught up in a rally, especially when the S&P 500 keeps pushing and tech stocks feel revitalized.
However, in a bull run, there are always weak links.
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These companies look mostly shiny on the outside, but things aren’t as rosy as the headlines suggest.
The smartest money doesn’t just chase the heat, but it watches for signs of trouble. Though some stocks are riding on momentum, others are starting to show real cracks, even as the broader market shows strength.
And when one of Wall Street’s top firms starts calling attention to names it thinks are heading in the opposite direction? Well, that’s exactly when it’s worth listening up.
The market’s built a strong head of steam this spring.
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As of late June, the S&P 500 has surged almost 11% for the second quarter, gaining north of 5.5% year-to-date.
That adds up to a 13% run over the past 12 months.
A spring surge helped the index rise over 25% from April lows. Fed rate-cut buzz and cooling tariff talk pushed the S&P to fresh record highs.
But now comes the hangover.
Some big names, including Bank of America’s Michael Hartnett, are flashing red flags.
He says the stock market is flirting with an overbought trigger, which is tough for investors to ignore.
And they aren’t.
Stock-pickers are separating the wheat from the chaff, looking at earnings quality, balance sheet strength, and valuation realism.
A big part of that is the belief that this isn’t a rising tide lifting all boats situation.
Look at Intel, which is still licking its wounds after dropping close to 30% over the past 12 months.
Moreover, Morningstar analysts say that U.S. stocks are currently trading at a slight premium to fair value.
Growth names in particular are especially rich. Small-cap still may look a steal, though, but patience is warranted. They haven’t caught the rally’s tailwind yet.
That’s exactly where short selling creeps in. Betting against overhyped names isn’t just a bold strategy; it can be a smart one.
That involves selling high, buying low (if you’re right).
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But if things go south, the pain has no ceiling. A short gone bad can lead to margin calls, losses, and you’re faced with a ton of regret. Hence, timing and discipline are imperative.
