3 Strongest Stocks in the S&P 500
ALAN FARLEY | December 12, 2018
The S&P 500 Index is stuck at the price level first traded in December 2017, meaning it hasn't gained a penny in the past year. However, a basket of individual components has acted extremely well during this period, lifting to multi-year and all-time highs. An examination of these issues could be informative, telling us where the smart money is taking risk these days. It could also uncover hidden opportunities at the end of a tough year that many shareholders wish never happened. There are many ways to identify the strongest index components, with year-to-date percentage gains at the top of the list. A more interesting technique organizes components by percentage positioning above or below the 200-day exponential moving average (EMA). This methodology has the advantage of finding stocks that are acting much better in 2018 than they did in prior years, which is an important metric for potential investors. I suppose it makes sense that a company mining salt is sitting at the top of the S&P 500 performance list, given 2018's odd behavior. But McCormick & Company, Incorporated (MKC) has been a solid performer for the past decade, lifting more than 500% through a long series of all-time highs. The uptrend last stalled in July 2016, when the index took off in a post-Brexit relief rally. This contrary behavior reflects the stock's defensive nature while also explaining superior 2018 performance.Breakout attempts through the first half of 2018 failed, but the stock finally cleared resistance in July, taking off in a powerful trend advance that has posted gains in excess of 40%. The rally stalled above $150 in early November, giving way to a trading range that has carved the outline of an inverse head and shoulders pattern. Two rally waves have failed to gain traction in the past week, but it seems foolish to bet against higher prices with this unlikely market leader.