Best Stocks: What to do with two 'Best Stock' names that are failing

Ritholtz Wealth Management identifies Expand Energy (EXE) and Deere & Co (DE) as stocks exhibiting technical weakness despite overall strong market breadth, signaling potential fading momentum or emerging risks. Expand Energy, a major natural gas producer, has broken its 50-day moving average and is testing its 200-day support near $100 due to commodity price declines, though analysts maintain $140+ price targets. Similarly, Deere has fallen below its 50-day MA ahead of its August 13th earnings, facing tariff concerns. These examples highlight the importance for investors to differentiate structural strength from surface-level momentum by monitoring individual stock performance, even in a healthy market.

Analysis

Despite a market characterized by strong breadth—a historically bullish signal of broad participation—technical weakness is emerging in specific equities, underscoring the importance of individual stock analysis. Expand Energy (EXE) has breached its 50-day moving average and is now testing a critical support level at its 200-day moving average near $100. This decline is directly correlated with a significant drop in commodity prices, with natural gas falling over 12% and crude oil 8% in the last month. While a recent firming in energy prices and reiterated analyst price targets in the $140s provide a potential floor, its RSI of 40 indicates momentum is nearly exhausted but not fully de-risked. Similarly, Deere & Co (DE) has also broken below its 50-day moving average, though it remains well above its 200-day. The stock faces a crucial test with its upcoming earnings report on August 13, coupled with persistent risk from potential trade tariffs. These instances highlight that even in a healthy market, company-specific factors and technical breakdowns can create significant divergence from broader market trends.

Key Decisions for Investors

• Investors should closely monitor individual holdings for signs of technical weakness, such as breaks below key moving averages, as broad market strength may mask underlying risks in specific stocks.
• For Expand Energy (EXE), the ability to hold its 200-day moving average support near $100 is a critical inflection point; a breakdown could signal further downside, while a successful hold might present a buying opportunity for those bullish on a commodity price recovery.
• Caution is warranted for Deere & Co (DE) ahead of its August 13th earnings, as tariff concerns and recent technical weakness could lead to volatility, making it prudent to wait for the post-earnings reaction before committing new capital.
• Shorter-term traders should consider remaining on the sidelines for both EXE and DE until price action confirms a new trend, while long-term investors may see this pullback as a potential entry point, contingent on key support levels holding.