These four consumer goods stocks have held up well in recent broader market short-term selling, as well as outperforming index benchmarks over the last three months. The ability to stay strong in the face of weakness indicates these stocks will continue to perform well should the S&P 500 and other U.S. indexes begin to creep back up in alignment with the long-term trend.
Under Armour, Inc. (UA) gapped higher in late July and has been consolidating since. A move above $69.30 is the first indication this stock could start to climb again, with a move beyond $70.94 (July high) confirming. Targets are $75 and $77.50 based on the runs higher already seen this year. Support is between $65.50 and $66.28, which also offers another opportunity to get long with a stop just below $65.25. Even with a deeper pullback, below that support area, additional support comes in just below $61, the region where the price gapped higher from in late July. (For related reading, see: Playing The Gap.)
Graphic Packaging Holdings Co. (GPK) has been trending well since late 2011, when the stock hit a low of $3.05. The stock has rallied nearly 300% in a little under three years. The stock did pull back in late July and has a well defined short-term resistance area. A break back above that short-term resistance — $12.16 — signals that another upward trending move is underway. The target for the move is between $13 and $13.25. There is the potential that the stock could continue to drift lower in this small channel, although support is likely to come in between $11.75 and $11.50, offering another buying opportunity if that occurs. A drop below $11.25 is a warning sign the stock has lost its upside momentum; it is not a short-sell signal, but long positions are no longer a high-probability trade. (For related reading, see: Support And Resistance Basics.)
Newell Rubbermaid Inc. (NWL) is moving strongly after being stuck below resistance at $32.54 since late 2013. The stock broke above the level on July 31, and created a new 52-week high at $33.51 on Aug. 8. The breakout could see the price go to $36.50. A pullback between $32 and $31.25 presents a second chance to get in on the emerging leg of the uptrend. If the price declines much below $31.50 it becomes increasingly probably that the upside breakout was false and the price could continue to slide toward the lower portion of the 2014 price range. (For related reading, see: Break Up or Break Down: Four Stocks At Critical Levels.)
Archer Daniels Midland Co. (ADM) is hovering right near its recent 52-week high at $49.17. In a strong long-term uptrend, a break above $49.17 breaks a small consolidation, which likely leads to another pop higher.The trend channel the price has been moving in for the last couple years presents resistance near $52. That doesn't necessarily mean the price will stop there but traders should be aware that deeper pullbacks could materialize in that range. In the short-term, a drop below $48.19 (consolidation low) indicates a drop toward $47 to retest the Aug. 5 gap higher. The main support area to watch is $43.40, near the June lows and channel bottom. If the price declines below that the uptrend is drawn into question, and long positions become much less attractive. (For related reading, see: Consolidations Ready For A Break Higher.)
The Bottom Line
These four stocks have been outperforming, and could very well continue to do so. If major indexes see buying pressure this week, these stocks are likely to see even greater buying pressure. If indexes slide lower these week, these stocks may be somewhat insulated from the selling. A trend will always eventually reverse though, and a strong stock can become weak. Whenever trading utilize a stop loss and pre-determine how much you are willing to risk on a trade. Keep the risk on each trade limited to a small percentage of your trading account, so a single loss doesn't have a significant negative impact on trading capital. (For related reading, see: A Look Back At Consumer Goods Stocks.)