The market is starting to show signs of exhaustion this week, just as seasonal weakness begins to weigh on sentiment. Coming into Friday, the popular SPDR S&P 500 ETF Trust (NYSEARCA: SPY), a broad market benchmark, was down 1.4%. Still, SPY remains in a firm uptrend, well above its 50-day simple moving average, and the bull market structure is intact. But if this softness marks the start of a deeper year-end pullback, investors may want to consider defensive positioning.
A smart approach when markets weaken is to focus on relative strength: the names that continue to lead, hold up, or even make new highs when the market slips. Three stocks in particular are doing precisely that and continue to outpace their sectors. If these names continue to lead, their outperformance could continue into year-end.
