Aerospace and Defense Names have been technical leaders for quite some time, and this weekend's events in Iran may leave clients wondering what kind of exposure they have. We discuss ways to find technically strong names on the platform.
This weekend brought with it news of US based strikes on Iran, sending global markets into a panic as the possibility for heightened volatility and further unrest brought uncertainly to the table. With the news came a slew of headlines that your clients are seeing on their television and social media, so it is worth having some talking points in your back pocket in the event of further volatility. Remember, the goal of Point and Figure charting is to help eliminate some of the noise markets throw at us each and every day, while still staying sensitive to market action as it persists. With that in mind, it is important to remind clients that you are monitoring the situation closely, but price action alone will dictate prevailing changes in overall allocation, rather the news headline of the last 20 minutes. Speaking of price action, markets opened trading Monday mostly lower as prospects of further volatility saw major domestic indices decline, while the likes of energy and defense names shot higher on the news. Broader domestic equities ultimately rebounded, seeing SPX make its way back into the green throughout the afternoon. While no one can say for certain what direction things will head next, we can all probably agree that there will continue to be back and forth action in the near future as markets digest the developing situation.
On the news, some of your clients might look to call in and ask about their exposure to aerospace and defense names if things continue to escalate. As you would expect, representatives from the sector popped on the news, seeing the likes of PPA or MISL advance heavily during trading on Monday. Those following the technicals might already have had exposure to the space for the last few months, as both funds score strongly (and have for the better part of the last few years) according to their NDW fund score. MISL was added to the Focus Five model to close out last year, while PPA has been a holding of the Invesco Sector 7 Model since 2022. Both funds are up over 15% so far this year and the technical picture is strong. Those interested in looking to pick up exposure to either option may eye a bit of normalization out of semi-extended territory, but both funds maintain strong support just below current levels. All that to say, it isn’t “too late” to open positions in either fund around current levels.
For those of you looking for more focused exposure to the space, there are several different avenues available to you on the platform. In the screenshot above, you’ll notice a highlighted “holdings” tab which allows you to drill down into the holdings of any fund available on the platform. At the highest level, we would suggest focusing on stocks that earn a rating of 4 or 5 according to the TA scoring system. Utilizing the screener (old or new) you can drill down even further. For example, there are a total of nine 4 or 5 TA score stocks that are a holding of either PPA or MISL that are 1) on a pair of buy signals and 2) not heavily overbought on their default chart. Those stocks are included below based on results as of 3/2/26. As volatility could continue as more news comes out of the Middle East, remember to utilize the alerts to be notified of positions hitting price targets or change in technical strength.
