Tickers in this Article: AMX, ROK, MXIM, BX, OHI, UHS
With the market in decline through the last five sessions, many stocks have broken through, or are approaching significant support. This is not a concern for all stocks, but can be for those that have already been under-performing. If a stock can't push higher as the indexes push higher, it is a sign the stock is relatively weak. When the market corrects itself, it is often these already weak stocks that collapse first and the hardest. As the price lows for March are approached in these stocks, traders are provided with opportunities for downside breakout trades, or if support holds, short-term buying opportunities.

SEE: The Anatomy Of Trading Breakouts

America Movil S.A.B de C.V. (NYSE:AMX) has been underperforming this year. The S&P 500 SPDRS (ARCA:SPY) ETF is up 6.59% as of April 10's close, while America Movil was up only 0.95%. With the stock already weaker than the market, further declines mean the stock could move through support. Through mid-February and March support developed just above $23. Therefore, a drop below $23 could signal further weakness and a potential test of $21. The 52-week low is at $20.65. The stocks has been moving in a ranging fashion, so if support holds, look for the range between $23 and $25 to continue.

Rockwell Automation (NYSE:ROK) has moved predominately sideways in 2012 while the major indexes moved higher. With recent market declines, the price of Rockwell shares are right on support. In late January and early March the stock found support just above $76. Given the relative weakness this year, a breach of $76 could indicate a more significant decline. If the break occurs, the target is $68. On-balance volume has already broken through support signaling weakness. If support holds, however, look for the price to move between $76 and $82.

SEE: Interpreting Support And Resistance Zones

Maxim Integrated Products (Nasdaq:MXIM) gapped higher on January 18 and since then has been putting in higher highs, but the stock continually pulls right back to support between $26.95 and $26.65. A drop below $26.60, or more significantly $26.50, points to further declines into $25 to $24.50. If the price holds above $27, look for the stock to move back toward the 52-week high at $29.25.

The Blackstone Group LP (NYSE:BX) started out the year strong but fell throughout February and the rally in March came up well short of the early February high. The stock is also well below its 52-week high at $19.63. Continued weakness will cause the stock to break through the March low at $14.49, indicating a further decline into $13.50. $14 has been a significant level on a number of occasions in the past and may provide additional support going forward.

Omega Healthcare Investors Inc. (NYSE:OHI) was strong early in the year, but it has been relative week through late February and March 2012. Recent declines bring the stock very close to support at $20.14. A drop below the more significant $20 points to further weakness, with targets at $19.50 and $18.50. On-balance volume is doing quite well showing buying interest in late March and early April 2012.

SEE: How To Use Volume To Improve Your Trading

Universal Health Services Inc. (NYSE:UHS) pushed higher until late February of this year, but since March has been making lower highs and lower lows. Since the middle of January those lows have collected above the February low at $40.65. A break below that level ($40.50 is more significant) signals a potential decline into $37. The price action from February through to Tuesday's close has taken the form of a complex head and shoulders pattern. Finding support at $40.65 is less likely, but this would indicate a move back higher into $43.

SEE: How To Trade The Head And Shoulders Pattern

The Bottom Line
When the broader market declines, stocks that have been relatively weak face the danger of breaking through support and correcting even lower. Moves to the downside are likely to be more decisive and sharp when the market is also moving down and volume is rising as sellers enter the stock. If the broader market finds support and begins to move higher, or volume does not increase on sell-offs in the stocks, these are indications the breakout is more likely to fail. In these cases the stock is still relatively weak, but it is more likely to meander a bit higher again while remaining contained below recent highs.

Charts courtesy of stockcharts.com

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

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