(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Gut check time! Friday was a very uncharacteristic day for the major averages, even if President Donald Trump came out over the weekend and said “just kidding, it’s fine.” I’m referring to renewed tariff threats that seemingly came out of nowhere, knocking down manufacturing stocks, consumer discretionary stocks, AI stocks, the pre-revenue circus, etc. It also revealed where the true strength of this market really lies when the chips are down (pun intended). When the market whooshes down like it did on Friday, we see some names fall off The Best Stocks in the Market list, which is expected — stocks violate their uptrends as sellers swamp buyers, which sets us up to see which names come back the fastest for new set-ups. Most importantly, we get a glimpse at the companies and areas of the market where the buyers simply do not care. The stocks that are under heavy accumulation; the stocks that go green in a sea of red: That gets our attention. Sean’s going to show you what’s happening with the list as of this morning. Then, we’ll take a look at five stocks that were aggressively bought. Happy Columbus Day. Sean — Prior to Friday, when a new round of tariffs were announced on China, the S & P 500 had not moved up or down 1% for 33 straight trading days, which was the longest stretch of near-zero volatility since 1976. We finally got some vol with new tariff policy. On Friday, Trump announced that the U.S. will impose an additional 100% tariff on all Chinese imports, effective Nov. 1. This comes in direct response to Beijing’s newly expanded export controls on rare earth materials and advanced tech components. Trump stated that this tariff will be added on top of existing import duties, ratcheting up the temperature of this latest trade war battle. Interestingly, we haven’t seen a ton of downside to consumers like many economists and pundits had expected. It’s tough to know if this time will be different. Instead of pontificating on what this means for the economy, consumers, businesses, rates and the 500 other moving parts of the market, let’s take a look at a few names on the Best Stocks list that held up well. When a stock trades flat or even higher on a broadly negative day, it’s signaling strength and underlying demand by investors. These are the types of stocks investors are hesitant to sell, or even eager to buy when the VIX springs to life. The top five performing stocks from our list and their one-day return on Friday were AZO up 2.7%, ORLY up 2.4%, SO up 2.3%, DUK up 1.9% and SPOT up 1.7%. AZO, ORLY and SO were all in the five best performers in the S & P 500 and DUK was sixth (SPOT is not in the S & P 500). These stocks were all up nearly 2% on a day when the S & P 500 was down 2.7% and the Nasdaq was down a whopping 3.5%. All five of these stocks are doing well fundamentally. SPOT expects 107% EPS growth next year, while AZO expects 17% growth and ORLY expects 12% growth. Both DUK and SO are slower growers in terms of EPS with 6% and 7% EPS growth next year, however they both trade at reasonable valuations of 25x and 21x, respectively, while playing a massive part in the AI theme and paying over a 3% dividend. Just over the past month, there have been deals in the AI space that are expected to use 16.1GW of energy, which is roughly the same energy 20 million U.S. households use on a monthly basis. Taken together, that mix of resilience and strong fundamentals is what shows up in price. Let’s check in on our normal Monday data drop on the Best Stocks list, and then Josh will comment on the technicals of these five stocks that bucked the trend on Friday. Sector leaderboard As of Oct. 13, there are 201 names on The Best Stocks in the Market list. Top sector ranking: Top industries: Top 5 best stocks by relative strength: Spotlight AutoZone, Inc. (AZO): Josh — AZO has gone from technically overbought to technically oversold from early September to now. I would trust Friday’s bounce. My line in the sand here is $3,900 which was resistance in the first half of the year prior to the August breakout. It should be support now. Below that level on a weekly closing basis, I’m no longer interested. O’Reilly Automotive, Inc. (ORLY): Josh — O’Reilly is sloppy but in a good way as it found support exactly where it needed to at $100 per share, the late July breakout level. Unfortunately, that’s too close for comfort for me. I don’t typically put on trades with that short of a leash, so for me, this is one to avoid. The Southern Co. (SO): Josh — SO’s relative strength on Friday was absolutely gorgeous. We wrote this one up earlier in the year with a whole batch of these Utilities-turned-growth-stocks. It looks even better now than it did then. Buy dips until the AI theme crashes, which may never happen. I’d follow this one with the 200-day, which is on the verge of turning upward-sloping. Duke Energy Corp. (DUK): Josh — Duke looks like an impending breakout. If you’re taking this trade, use $120 as a stop. You’re risking seven bucks for something that could be an eruption. Spotify Technology SA (SPOT): Josh — Spotify has been consolidating since June after a massive rally that saw the stock 10x from below $100 at the end of the 2022 bear market to a price approaching $800 per share before backing off. I like buying as these consolidation periods come to an end and a new breakout is in sight. We’re not quite there with the SPOT chart, but it should be on your radar. If you must get long here, consider $620 as your risk management area. A break below and the market may know something you don’t. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC” TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
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