These Maverick Stocks Buck the Downtrend

It's not easy to find stocks that are hitting 52-week highs these days, but they do exist. For whatever reasons, these maverick issues have bucked the selling tide and are attracting steady buying interest. That's quite a feat, considering how few legitimate buyers are taking risks in this treacherous market environment.

These leadership issues cover a wide range of market corners but, not surprisingly, there are quite a few gold and silver stocks. After all, this is the only sector moving higher in a bonafide uptrend. It appears the rest of this elite group is responding to special situations, unique growth stories or small niches that are taking advantage of the current malaise.

Two caveats go along with today's analysis of these top-performing stocks. First, the majority of these issues should outperform the broad market after it stabilizes and starts to move higher. Second, a minority are direct plays on a contracting economy and could sell off at the same time, because it's likely that cash will rotate into more traditional growth plays.


Anadys Pharmaceuticals (ANDS) -- Daily
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eSignal

Anadys Pharmaceuticals ( ANDS) is a small biotech that sold off into single digits back in 2006 and dropped into a long basing pattern. It was testing the multiyear low under $1.50 in January when it shot higher on heavy volume, after positive trial results for of its key products. The subsequent rally lifted price over 400% in just six weeks.

The stock started to pull back in late February. The decline accelerated until last week, when it bounced at four-week support around $5.50. However, this downturn may continue and eventually test the 50-day moving average, currently at $4.98. A bounce at that level might be a precursor to a recovery that lifts price back up to the rally high.


O'Reilly Automotive (ORLY) -- Daily
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eSignal

O'Reilly Automotive ( ORLY) is leading the charge in a strong auto parts rally that has many observers shaking their heads. This unlikely leadership group is benefiting from the economic downturn, because do-it-yourself auto repairs are likely to boom in the months ahead. This emerging trend has lifted the stock to a 15-month high.

Last week's rally filled a big gap at that level. This brought a few sellers into the mix, but the issue is holding up well and building a base for a rally leg that could reach the 2007 high in the upper $30s. In the short term, interested parties should pay attention to Autozone ( AZO) earnings this morning, because they'll affect the entire sector.


Optimer Pharmaceuticals (OPTR) -- Daily
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eSignal

Optimer Pharmaceuticals ( OPTR) is another small biotech that's showing great resilience to recent selling pressure. It sold off from $9.70 to $3.30 during the broad 2008 decline and then turned tail in a powerful V-shaped recovery, lifting back to the high by mid-November. It based at that level for six weeks and then broke out at the start of 2009.

The rally lasted just a few days, with price topping out at $12.43 and giving way to a broad consolidation that's still in place. The stock has gone to sleep in the last two months, which isn't a bad thing considering what's happening to the broad indices. This holding pattern indicates that investors are waiting for more input on recent drug trials.


American Italian Pasta Company
(AIPC) -- Daily
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eSignal

American Italian Pasta ( AIPC) is an unlikely leader in this bear market. It dropped to an all-time low at $3 in 2006 and entered a weak recovery. It tested that level in March 2008 and jumped into a strong uptrend that's still in place. The graceful series of higher highs since that time is remarkable, given the trajectory of the major indices over the same period.

The rally stalled out nearly three weeks ago, after the stock gapped up to a three-year high. That level corresponds with resistance from a broad double top that was broken back in 2004. The stock should eventually overcome the overhead barrier but it might have to wait until a gap in the upper teens gets filled, perhaps on the next pullback.


Alan Farley provides daily stock picks and commentary with his "Daily Swing Trade" newsletter.


Know what you own: Competitors to O'Reilly Automotive include Advance Auto Parts (AAP) and Genuine Parts (GPC).

Please note that due to factors including low market capitalization and/or insufficient public float, we consider ANDS and OPTR to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Farley had no positions in stocks mentioned, although holdings can change at any time.

Farley is also the author of The Daily Swing Trade, a premium product that outlines his charts and analysis. Farley has also been featured in Barron's, SmartMoney, Tech Week, Active Trader, MoneyCentral, Technical Investor, Bridge Trader and Online Investor. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

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