Starting with the decline that began at the beginning of April 2012, the S&P 500 has been putting in lower lows, sinking below the April 9 low (1357.38) and more recently the March 6 low (1340.03). This has drawn the uptrend into question for the index, but all stocks are not following suit. A contingent of large capitalization stocks still remain above March and April support levels. This is called relatively strength, as these stocks are acting strong relative to the market. If the S&P 500 gains traction and begins to move higher, look for these stocks to pop higher. (Nasdaq:AMZN), a major online catalog and mail order shopping site surged more than $20 in a single session on April 27 and is so far holding those gains. Since that time, the stock has moved between a low of $218.20 and a high of $233.84, creating a narrowing range. The breakout of that range is likely to play a big role in the longer-term direction of the stocks. A drop below $218.20 has bearish implication and provides a downside target of $205. A rise above the range high at $233.84, on the other hand, means more upside is likely. The 52-week high at $246.71 is the target for an upside breakout.

SEE:The Anatomy Of Trading Breakouts

Archer Daniels Midland (NYSE:ADM) saw a bit of weakness in April 2012, moving below the March low, but it has recovered aggressively. Earnings on May 1 popped the stocks higher and it continues to perform well, although recent action has been more lateral than upward. Support has developed at $31.99; therefore, a drop below that level could drop the stock to targets at $31 and $30. A rise above $33.30, on the other hand, is likely to result in a test of the 52-week high at $33.98, and if exceeded, it could head toward the next target at $36.

SEE: Interpreting Support And Resistance Zones

ACE Limited (NYSE:ACE) is a Swiss insurance company that has been marching higher since October. The uptrend has remained intact throughout that time and continues to trade near it's 52-week high. Support is at $73.48 (May 9) and if penetrated, it is likely to result in a test of the $71 area. Since February, $71 has been a floor and is likely to continue to hold, but if broken, it is a strong bearish signal. There still could upside left in this stock, though. A rise above $76.50 should trigger a test of the 52-week high at $77.42. The target beyond the 52-week high is $80.

SEE: Support & Resistance Basics

Avalonbay Communities (NYSE:AVB) is a U.S. residential REIT that has been in a strong uptrend since October. The trendline for the move is currently being tested, although primary support still lies some distance away. The trendline currently intersects near $142, which is also an old resistance area (should now act as support); therefore, if this area holds on the current short-term decline, it could be a good buying opportunity. A drop below $142 is likely to trigger selling into the $136 to $134 region. The 52-week high at $148.62 is not far away, though, and if the REIT can bounce and exceed that level, the next target is $152.

The Bottom Line
The stocks above have been showing signs of relative strength and therefore present potential upside if the market (gauged by an index such as the S&P 500) can gain traction. Each stock presents its own unique circumstance and levels to watch. Keep an eye on support levels to see if they hold, as this will present a buying opportunity. If support is broken then step back (or stop out) and wait for another opportunity as more downside could be forthcoming. On the other hand, if resistance levels are penetrated, it is a confirmation the stock is still strong and look for the stock to move to the targets indicated.

SEE:Momentum And The Relative Strength Index

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