Key DJIA Stocks Facing 10% Sell-Off From Highs (AA, CAT, CVX, DD, GE, JPM, XOM, CSCO, HPQ, MSFT, BAC)

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Many Dow Jones Industrial Average stocks have just recently sold off more than 10% and many are almost at that key 10% sell-off mark.  Historically investors have used 10% as the hurdle for which they draw the line in the sand.  A 10% stop-loss, a 10% pullback, a 10% gain… Over the last two years the market is up massively and there has hardly been a time where the Dow Jones Industrial Average had sold off 10% to allow new investors to finally want to jump in.  This happened last summer when the economic recovery was slowing. In late-April 2010 the DJIA peaked at 11,300 and that had fallen to under 10,000 in May, June, and July.

Now we are entering this summer in 2011, and the economic recovery is slowing. With some of the selling and some of the headlines coming out of late, it is rather amazing that the Dow Jones Industrial Average is off by only about 3% from its peak.  We wanted to take a look which DJIA components were now either off 10% or were about to be off by more than 10%. The stocks which are now freshly down by 10% from the 52-week high are Alcoa Inc. (NYSE: AA) and Caterpillar Inc. (NYSE: CAT). Perhaps even more important is the list of DJIA stocks which are now almost 10% off their fresh 52-week highs. This group includes Chevron Corporation (NYSE: CVX), EI DuPont de Nemours & Co. (NYSE: DD), General Electric Co. (NYSE: GE), J.P. Morgan Chase & Co. (NYSE: JPM), and even Exxon Mobil Corporation (NYSE: XOM).

It was not that long ago that we published “Ten Reasons to Worry About a 10% Correction” noting some of the key events going into summer.  Now we are seeing the first stage of that 10% correction, if the stocks being sold off here are any barometer.

You already knew that Cisco Systems, Inc. (NASDAQ: CSCO) and Hewlett-Packard Co. (NYSE: HPQ) had violated those 10% thresholds long ago.  In fact, both of those have freshly hit 52-week lows with Cisco off by 36% from its year high and H-P off by over 25% from its year high.  Microsoft Corporation (NASDAQ: MSFT) is still down almost 17% from its year high.

Banking is not technology, but Bank of America Corporation (NYSE: BAC) remains in the punishment zone as it is down almost 29% from its 52-week high. Unfortunately for BofA investors, the problems persist here and the remedy is not seen in the immediate horizon.

Alcoa Inc. (NYSE: AA) is now down over 10.9% from its highs.  It is also up about 67% from its year-low.  After closing at $16.45, its 52-week range is $9.81 to $18.47. You have seen the selling in metals of late, and the growth slowing in China and India have played a part in the economic growth-metals like Alcoa is considered. Thomson Reuters still has a consensus price target of $20.26.

Caterpillar Inc. (NYSE: CAT) is now down over 12.4% from its high, but is also up almost 86% from its lows of the last year.  After closing at $102.08, its 52-week range is $54.89 to $116.55.  The raising of rates and fighting inflation at the expense of growth in China and India are partly to blame here.  If a global slowing does come about, the Cat won’t be able to avert a business slowing. Thomson Reuters still has a consensus price target of $129.63.

The most important group is that group which is now almost 10% off of fresh 52-week highs.  One analyst downgrade, one sector rotation call, one large fund manager selling shares, and many other factors can easily make one extra bump down.  For a 1% drop or a 3% drop in any single individual stock it does not require much negative news at the current time.

Chevron Corporation (NYSE: CVX) is one of the five DJIA components (as seen hereafter) which fall into the category of being within striking distance of being 10% off of their fresh 52-week highs.  After closing at $100.41, its 52-week range is $66.83 to $109.94.  Chevron is now down 8.67% from its recent 52-week high.  Thomson Reuters still has a consensus price target of $119.47.

EI DuPont de Nemours & Co. (NYSE: DD) is another cyclical stock that has sold off on fears that the global growth story is petering out.  At $52.30, its 52-week range is $33.73 to $57.00.  DuPont is now down 8.25% from its 52-week high. Thomson Reuters still has a consensus price target of $63.10.

General Electric Co. (NYSE: GE) is another cyclical, but it is also the slow-moving conglomerate.  The Great Recession was brutal to G.E. as some worried it was at-risk, but the company is back to basics and Jeff Immelt is more happy with the portfolio than ever.  At $19.59, its 52-week range is $13.75 to $21.65.  GE shares are now down 9.52% from the 52-week high.  Thomson Reuters still has a consensus price target of $24.07.

J.P. Morgan Chase & Co. (NYSE: JPM) is fresh off its annual meeting and we already knew that DJIA-component Bank of America Corporation (NYSE: JPM) was in a far worse place.  The financial requirements ahead may keep these more like regulated utilities than engines of growth.  At $43.81, J.P. Morgan’s 52-week range is $35.16 o $48.36.  Jamie Dimon’s bank stock s now 9.41% off of the 52-week high. Thomson Reuters still has a consensus price target of $55.69.

Exxon Mobil Corporation (NYSE: XOM) recently closed at $80.41 and its 52-week range is $55.94 to $88.23. Big Oil is now down 8.86% from its 52-week high.  As with Chevron, the commodity sell-off and the oil sell-off of late drags down the whole oil patch.  Thomson Reuters still has a consensus price target of $92.36.

JON C. OGG

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