While "sell in May and go away" might sound a little cliche, so far that old saying would have made for a solid trading plan. Since printing 1370 on the first trading day of May, the S&P 500 quickly fell to a low of 1318 only a couple weeks later. After rebounding slightly on relatively weak volume, the index now sits strangled between the 20 and 50-day moving averages, with the former acting as a ceiling and the latter providing support. Both moving averages are starting to flatten out, indicative of a range-bound market as opposed to a trending one. Although the recent onslaught of distribution days has made it tricky for swing traders to get involved in the market, it's always a good idea to keep a list of stocks that are holding their own. The names that display relative strength are the most likely to make solid gains once the selling pressure in the overall market lifts.
LULU has a history of consolidating, then breaking out on big volume. The stock has been resting since late April, and volume has been very light, indicating a lack of big sellers. As shares continue to exchange hands between 90 and 102, LULU has been making higher lows and lower highs, and resolution should be coming soon. Judging by the stock's prior patterns, I'd look for LULU to make another thrust higher.
DISH has held up extremely well since gapping up on May 2nd. The stock has put in some sideways work over the past couple weeks, with a well-established range getting knocked out between 30 and 28.20. Volume has been quiet during the consolidation, and I'd look for this range to get resolved to the upside.
COH broke out of a 4-month-long base in late April on heavy volume. Since then, the stock hasn't been able to get much momentum, as it's been held back by the overall market weakness. However, COH did retest the downtrend line that previously held as resistance, and it now looks to be providing support. With the exception of a couple days, COH has been trading in a narrow range between 60.70 and 58. The weekly chart shows a pattern of 4-weeks-tight, meaning that price has closed each week within 1% of the prior week's close for the past four weeks. This tight trading action is impressive given the broad market conditions, and I'd expect COH to see new highs shortly.
TIF's chart looks similar to COH's, as luxury retail has held up very well. Just like COH, TIF recently broke out of a multi-month base and now appears to be building a base-on-base pattern. Previous resistance around 66 held as support on May 5th, and the stock sits just below new all-time highs.
GMCR is an example of a stock that has been relentlessly targeted by the shorts for years despite the stock's well-defined uptrend. According to Finviz, GMCR has a short ratio of 19% despite its great fundamentals: EPS quarter-over-quarter is up 153% and sales quarter-over-quarter are up 101%. Sellers have held steady around 77.50, but it seems like only a matter of time before the stock stages another breakout to new highs.
Since gapping up in late April, WAT found resistance at 100 and again at 99.90, demonstrating how the triple-digit mark can be a psychologically significant barrier. If the stock can finally break above 100, I'd expect a nice move higher from there.
CHRW looks to be forming a nice cup-and-handle, and a move above the high of the recent consolidation would complete the pattern. I'd look for a break of 81.25 on good volume to get involved.
KCI is in a beautiful uptrend, as any pullbacks to the 20-day moving average have been snatched up by buyers. The stock is now coiling beneath 60, and it looks ready for another impulse higher so long as the bulls can clear that line of resistance.
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