Even in a Good Market, Some Stocks Are Falling off a Cliff

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Even when the market’s near record highs, some names are breaking lower. This post will highlight a few of those areas where sentiment remains especially weak.

The first area that’s jumped out of my RadarScreen® yesterday were the asset managers and mutual-fund operators: Blackrock (BLK), Franklin Resources (BEN), Invesco (IVZ), Federated Investors (FII) and Legg Mason (LM) are all either near 52-week lows or have dropped sharply in the last month.

Most of them had unremarkable or modestly bearish earnings reports. The real story is a general decay of their traditional fee-based business model. Fidelity Investments added fuel to that fire on Wednesday by announcing portfolios with expense ratios of zero.

Next, McDonald’s (MCD) is one of the worst-performing members of the Dow Jones Industrial Average so far this year. It tried to rally in April on strong earnings, but naysayers warned the good news resulted from one-off price increases. A similar rally in June (this time on job cuts) also got shrugged off. Then when earnings did beat estimates on July 26 no one cared. Instead they were focused on slowing traffic at the Golden Arches.

McDonald’s (MCD) year-to-date chart with 50-day moving average.

Speaking of gold, bullion futures (@GC) plowed to a new low. Silver (@SI) wasn’t far behind. It’s a tough life being an inflation hedge when prices just ain’t going up!

It’s also tough life for livestock companies as tariff worries hammer chicken and pork exports. Just look at Tyson Foods (TSN), which is probing new 52-week lows. By the way, another food giant, Archer-Daniels Midland (ADM), actually benefited from the uncertainties.

One big tech name seemed to fall into the “breaking down” camp: Western Digital (WDC). This time investors also dismissed better-than-expected earnings and instead focused on poor margins and weak pricing for NAND memory.

In conclusion, the S&P 500 and Nasdaq-100 managed to hold their ground near record highs yesterday. But a few areas continue face selling pressures.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.