It’s almost that time of year … no, I don’t mean Christmas! I’m referring to tax-loss selling. Every year, I find several great set-ups in stocks that get punished/liquidated into year-end as traders try and sell their big losers to take advantage of the tax losses that those stocks create. I will try and post the work I do in this area again this year.
To start, I do a search for possible candidates … I concentrate on the biggest and most liquid names. So my search begins with the top 1000 market cap names on the US exchanges. Then I look to only stocks that have a YTD High/Low range that is at least 25% of the current closing price … I do this because I want to look at only stocks that have been punished this trading year and therefore are obvious candidates for tax-loss selling.
Then I want to only look at stocks that are in the bottom 10% of their YTD High/Low range … those are the stocks that are near their lows for the year, and probably the ones that are going to see pressure over the next month. There are only 69 stocks that make up this list as of Friday’s close.
I really don’t start to focus on this group of stocks until we get into December … but it is always interesting to see the names on the potential list as we move through November. I like to see the dominate sectors to see if there is a theme for this year’s tax-loss selling. Anyways, here is the current list of potential tax-loss sellers.
By Market Cap
The most notable/largest market cap name on the potential tax-loss seller list is FB. YTD FB is down 17.85%. interestingly, GE is once again on the tax-loss selling list here in 2018 just like it was in 2017.
GE – Daily Chart
You can see the circled area on the above daily chart, the price action at year-end 2017, and then the first 8 trading sessions of 2018 where GE made a bounce many tax-loss candidates will often make. GE gained over 11% in those first few trading days of 2018.
By Sector – Chart #1
By Sector – Chart #2
By Sector – Chart #3
By Sector – Chart #4
By Sector – Chart #5
I’ll update my watchlist as we get to the end of the month.
Cheers … Leaf_West