3 Stocks That Are Stronger Than the Market
Stocks outperforming the market during this pullback are interesting because it reveals which names institutional investors have no intention of selling. Here are three.
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In late October of last year, as leaves were falling and pumpkins were being carved, the S&P 500 slipped to 4100. Nearly six months later, the large-cap index is trading 23% higher.
During that time, stocks have climbed a wall of worry. Projections for Fed rate cuts have been repeatedly pushed back. Geopolitical tensions have soared.
Through it all, traders have bought every dip and been rewarded for doing so. Pullbacks have been shallow and brief.
That changed last week when the S&P 500 broke down from a small bearish pattern. Since then, stocks have had difficulty holding intraday gains, as highlighted by yet another late-day selloff on Wednesday.
The rounded top formation (shaded yellow) suggests only a short-term pullback. The S&P 500 is trading below its 50-day moving average (blue) for the first time since November.
Unsurprisingly, many individual stocks in a variety of sectors have also formed bearish patterns, as discussed here.
However, there are some names that are outperforming the market during this pullback. This is interesting because it reveals which names institutional investors have no intention of selling.
Why would institutions hold a stock while the market is falling? It's possible that their research has uncovered some positive information about that company. While they won’t pass that information on to you and me, their reluctance to part with the stock could be considered a tell.
Here are three names that institutions are holding, despite the current environment.
GE Aerospace
After spinning off GE Healthcare and GE Verona, venerable General Electric has been rebranded GE Aerospace GE. This leaner version of GE has generated a stratospheric 54% year-to-date return.
Not only has this stock been unaffected by the market’s recent pullback, it has formed a bullish pennant (black lines). This is a continuation pattern that indicates the stock’s next move will be higher.
GRADE: A
Amazon
On Wednesday, the S&P 500 closed beneath its 50-day moving average for the third consecutive session. Meanwhile, Amazon AMZN is trading well above that key indicator.
This stock is just one week removed from a 52-week high. Amazon is scheduled to report earnings on April 30.
GRADE: B+
Charles Schwab
Shares of Charles Schwab SCHW reached a 52-week high on Tuesday, after the company reported first-quarter earnings. Schwab is seeing a boost from its integration of TD Ameritrade.
The stock has managed to stay above its bullish trendline (black dotted line) despite the recent pullback.
GRADE: B
At the time of publication, Ponsi was long GE.
