At the start of the week it looked like the S&P 500 needed a pause after its long run higher as I detailed here. And it didn't take long for that pullback to start. The week opened at the high and has traded lower since. So what to do in the short term as things plays out? Stick with your process and plan, honor your stops and play defense. Defense stocks that is.
Defense-oriented stocks have lit it up for the entire year. And amid Tuesday's sea of red, these big guns are all green: LMT, NOC and RTN to name a few. Raytheon may have the prettiest chart -- a strong, steady uptrend using the 50-day SMA as support.
But Northrup Grumman may be the best short-term opportunity.
The chart shows the stock trending higher since a low in January. It consolidated in July and started to pullback last week. On Monday it touched that rising trend support and bounced. By Tuesday it was following through to the upside. The momentum indicators are also turning higher. The RSI is bouncing back up through the mid line off of the 40 level and the MACD is leveling. With a stop around 215, this stock can be traded to the upside looking for 225 or higher on the next leg.