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Nike, Nvidia and other failing stocks could be signaling market shift everyone is trying to forecast

  • U.S. stock markets haven't had a significant pullback since late 2015 into 2016.
  • Traders are looking at momentum stocks for signs of changing market sentiment.
  • Some 23 S&P 500 names recently touched their highs only to pull back 5 percent or more.

Stocks have been surprisingly resilient in the face of bigger-picture risks around the world, though some would argue that it isn't all that surprising.

There hasn't been a significant pullback in the U.S. markets since the end of 2015 into early 2016, when the S&P 500 fell by around 14 percent between early November and mid-February. Since then, traders and investors have been rewarded for buying stocks on any kind of a retreat, but could it finally be time for that larger pullback that so many have been trying to forecast?

While there aren't any real ways to reliably predict the future, some traders are looking for signs of changing market sentiment in some of the stocks that have been success stories as of late. One way to try and identify stocks that could act as "tells" on the broader market is to screen for them using certain parameters.

In order to illustrate this point, we ran a simple screen to look for stocks that have been relative winners in recent trading, but have been showing some signs of weakness. The parameters are as follows:

  • S&P 500 members.
  • Recent highs hit in August month to date.
  • Greater than 5 percent pullback from those highs.

The search found 109 stocks in the S&P 500 that have hit 52-week highs this month. Of those, 23 stocks have pulled back by at least 5 percent from those recent highs.

Some notable stocks passed those screening parameters, including athletic apparel giant Nike, farm equipment maker Deere, semiconductor maker Nvidia and online travel site Priceline Group.

And some continue their fall. Nike was down 4.7 percent on Friday morning and Deere was down 8.4 percent.

Some of these stocks have been much more of a momentum play than others. For example, Nvidia shares have already gained 51 percent in 2017, and 164 percent over the last 12 months. They are nearly 8 percent below recent highs. Meanwhile, Prudential Financial hit a high on Aug. 2, and has fallen 11 percent since then, resulting in a 2 percent drop on a year-to-date basis.

Screens like this are one of the many ways that some traders are identifying shifting momentum. This is by no means a perfect way to measure a turn in the market, but some of these screening methods could help in identifying emerging trends.

Ticker

S&P 500

Last

52Wk High

52Wk High Date

% Below 52WK H

1

MPC

Marathon Petroleum Corporation

49.7

56.81

1-Aug-17

12.52%

2

PCLN

Priceline Group Inc

1812.97

2067.99

8-Aug-17

12.33%

3

PRU

Prudential Financial, Inc.

102.66

115.26

2-Aug-17

10.93%

4

WYN

Wyndham Worldwide Corporation

96.15

106.5

3-Aug-17

9.72%

5

ALB

Albemarle Corporation

112.11

123.48

7-Aug-17

9.21%

6

LNC

Lincoln National Corporation

68.89

75.78

8-Aug-17

9.09%

7

ANDV

Andeavor

92.72

101.52

1-Aug-17

8.67%

8

VRSK

Verisk Analytics Inc

80.9

88.17

1-Aug-17

8.25%

9

MS

Morgan Stanley

45.09

48.9

8-Aug-17

7.79%

10

AMG

Affiliated Managers Group, Inc.

173

187.08

1-Aug-17

7.53%

11

NVDA

NVIDIA Corporation

161.47

174.56

8-Aug-17

7.50%

12

AMP

Ameriprise Financial, Inc.

138.74

149.99

8-Aug-17

7.50%

13

MSI

Motorola Solutions, Inc.

87.13

93.75

4-Aug-17

7.06%

14

TDG

TransDigm Group Incorporated

274.69

295

8-Aug-17

6.88%

15

DE

Deere & Company

123.98

132.5

9-Aug-17

6.43%

16

FISV

Fiserv, Inc.

121.09

129.35

1-Aug-17

6.39%

17

UNM

Unum Group

48.16

51.43

8-Aug-17

6.36%

18

CTAS

Cintas Corporation

131.19

139.74

1-Aug-17

6.12%

19

EL

Estee Lauder Companies Inc. Class A

98.32

104.5

9-Aug-17

5.91%

20

ALGN

Align Technology, Inc.

169.36

179.76

16-Aug-17

5.79%

21

CINF

Cincinnati Financial Corporation

77.65

81.98

3-Aug-17

5.28%

22

NKE

NIKE, Inc. Class B

57.46

60.53

3-Aug-17

5.07%

23

HRB

H&R Block, Inc.

30.2

31.8

15-Aug-17

5.03%

Source: FACTSET

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