Stocks just closed out their worst first quarter ever.
The S&P 500 fell 20% in the first three months of the year, breaking the previous first-quarter record set in 1938, as the coronavirus pandemic worsened.
Craig Johnson, chief market technician at Piper Sandler, says one performing stock is setting up for a fall.
“J.M. Smucker — this is a stock to me that looks like it should be sold. It’s up 6% year to date, but … it’s been a better relative performer than an absolute performer, to be clear,” Johnson told CNBC’s “Trading Nation” on Tuesday. “This is a stock that we should be taking some profits.”
John Petrides, portfolio manager at Tocqueville Asset Management, agrees with Johnson’s J.M. Smucker call.
“Consumer staples has been a relative outperformer, but Smuckers for a very long time has not been able to grow organically. I think investors are playing the run on the supermarket, and the fact that it has an above average yield, and that is supporting the valuation. But organically and structurally, I think the company has issues that it still has to work through, so I wouldn’t pay up for this stock,” he said during the same segment.
Petrides also notes that Netflix may be facing downside pressure after a 16% run this year. He says high valuations and dependency on subscriber growth and increasing content costs could keep a check on the stock.
There is one stock Johnson says has the ability to keep on climbing.
“I think the opportunities in other names, such as in the technology sector, where you have Nvidia. When you look at that chart, this is a stock that’s been much stronger. It’s corrected right back to the rising 200-day moving average, great support at about $200,” said Johnson.
Johnson says Nvidia could see moves to the high $300s. That would surpass its February record high of $316.32.