While the SPDR S&P 500 (ARCA:SPY) declined from $173.60 on September 19 to $169.53 at the September 24 close, not all stocks saw a slide. Four stocks in particular have been very resilient, pushing higher recently and trading well above their 200 and 50-period moving averages. The S&P 500 is still in an uptrend and these stocks are currently exhibiting relative strength compared to the index; while it possible that could change, if the S&P sees another run higher these stocks are likely to be leading the charge.

Goodyear Tire (Nasdaq:GT) was trading near $12 in April 2013, and closed at $22.82 on September. That's about a 90% gain in 6 months, and while a lot of stocks saw pullbacks over the last several days, Goodyear closed just shy of its 52-week high set just days before. Most upside targets have been exhausted but a couple remain; the first is at $23.50 and the next at $26.25. If the price continues above the 52-week high at $23.13 then the first target should be hit in relatively quickly. The next could take one to two months to reach. Stops can be be placed just below $21.40--if the price drops below that a larger correction is likely in the works. If the price continues to pull back, taking a long between $20 and $19 is compelling. A stop can be placed just below $19, as a fall below that indicates the stock is likely transitioning to the downside.

Bullish chart of Goodyear Tire & Rubber Company. Support near $21

Micro Technology (Nasdaq:MU) has almost tripled since the start of 2013 when it traded near $6, and recently hit a high of $17.59 on September 19. The next price targets are $20.25 and $21.25. If the price moves back above the 52-week high at $17.59 that's a bullish sign. If we see a pullback I still like the stock really anywhere above $14. If the price falls below $14 it indicates a deep retracement and that the trend is likely losing steam. For those who are more risk adverse, a drop of $3 from the current high would be a larger percentage decline than we have seen throughout the 2013 rally, so if that occurs it is a warning sign and will provide an exit signal before the $14 region.

Bullish rally on the chart of Micron Technology.

Delta Air Lines (NYSE:DAL) put in a new high at $24.10 on September 24. At the start of the year it was trading near $12, so the stock has already doubled. The next target is a $26, and on September 24 it appears that the price moved above resistance and out of a short-term consolidation. If the price drops back below $22.75, a deeper retrace is expected. Additional support is at $22, which is another good entry area, but if the price continues to fall below $20.00 it signals the uptrend is weakening or possibly over.

Stockchart of Delta Air Lines. The stock looks poised to go higher.

Safeway (NYSE:SWY) is already up 74.8% this year, but continues to push higher. The stock saw a large consolidation between April and early September, and based on that the next target is $32.75. This was pretty much reached on September 24 by the intra-day high ($32.61) though. The only other level I see of potential interest is $33.40. Unfortunately with such a strong run, going long here doesn't seem compelling given the potential reward-to-risk based on the profit targets. Minor support is at $30.70, followed by $28.75 which is the intra-day high right before a sizable gap up. If the price pulls back into this area--and then starts to move higher again--the long trade is more compelling. The risk is lower, and the potential profit higher. The pullback will also provide us with another profit target, likely to be near $34.75.

Incredible run on the chart of Safeway.

The Bottom Line

These stocks are performing well, and continue to push higher even as the S&P 500 has seen a bit of a dip. This is called relative strength. While these stocks may continue to rise on their own, the trades are much more compelling if the S&P 500 begins to rise as well. Even though these stocks are moving very well currently it is still important to pick entries where the profit potential justifies the risk. And risk should always be managed, because even though these stocks are strong right now and in the recent past, eventually all stocks lose their relative strength position. For now though, I'd still focus on the upside, as currently we have no indication from the S&P 500 or these stocks that the rally is over.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  3. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  5. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  7. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  8. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  4. Indicator

    Indicators are statistics used to measure current conditions ...
  5. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  6. Lion economies

    A nickname given to Africa's growing economies.
  1. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  2. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  3. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  4. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!