Through every market cycle, there always appear a few stocks whose story is so powerful they seem to transcend the markets. These stocks are important to watch, as they often act as a leading indicator for the rest of the markets. Often, when the markets head lower, these stocks simply continue to base or consolidate. Then, when the markets begin to stabilize, these stocks rocket higher ahead of the pack.
Hansen Natural Corporation (Nasdaq:HANS), proprietors of the popular "Monster" energy drink, have been a monster stock in their own right. HANS was in the process of consolidating through most of July, and simply experienced a few days of volatility during the markets ugly decline in early August. When the markets began to grope for a bottom, HANS rocketed higher and ended up hitting new all time highs. It has since started to back off those highs and is testing the top of the prior base for support. It held up at the 50-day moving average and a bounce from here could propel HANS back to new highs.
Green Mountain Coffee Roasters, (Nasdaq:GMCR) has been one of the strongest stocks of the past few years. It has risen steadily with very few pullbacks lasting more than a few weeks. GMCR has been consolidating since July as well, and is close to the top of the range. Chasing a breakout at this stage is likely a risky proposition, but GMCR is certainly worth watching to see if it can offer a trading opportunity soon thereafter. Also, a reversal near this area is worth mentioning, as it would reveal a lack of appetite for risk in market participants.
Mastercard Incorporated (NYSE:MA) has also been amazingly strong throughout the recent market weakness. MA did experience a volatile pullback along with the stock market in early August, but buyers stepped in and aggressively bought MA near $300. MA then surged back and has settled into a wide consolidation between $300 and $340. MA may be trying to clear this range, and is back to all time highs again.
McDonald's Corporation (NYSE:MCD) is also back to all time highs after a breakout failure that coincided with the markets weakness. MCD ended up pulling back towards $82.50 before rebounding in a V and surging back to new highs. This was an impressive display of support by MCD bulls, and MCD is now pausing near these highs. Any strength from here could lead to a follow through move higher.
Notice how all of these stocks are back to all time highs while the markets continue to simply try and stabilize. These stocks are ignoring the trend in the markets and acting as true leaders. It does not mean traders should rush to jump into these stocks, but traders should definitely pay attention to the behavior in these names. If these stocks start to falter, it would almost certainly mean larger issues in the overall markets. However, any continued strength should also not be ignored as more peers could follow their lead.
Charts courtesy of stockcharts.com
At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article