The battered chip sector tends to do well after Memorial Day
Since 2010, the U.S. stock market has tended to struggle during the shortened Memorial Day week. However, if recent history is any indicator, several stocks could buck the trend next week, including battered Apple supplier Broadcom Inc (NASDAQ:AVGO). Below, we take a look at the 25 best stocks to own the week of Memorial Day.
Looking at S&P 500 Index stocks over the past 10 years, a handful of chip names made the list. However, AVGO has racked up the biggest average gain over the past 10 years, rallying an impressive 3.06% in that four-day stretch, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Further, since its debut in late 2009, the tech name has ended the week higher more than three-quarters of the time.
A post-holiday rebound would be a much-welcome sight for Broadcom shareholders. Amid escalating trade tensions between the U.S. and China, semiconductor stocks have been crushed in May. AVGO, specifically, has already shed 18.6% so far this month, bracing for its worst monthly loss ever.
At last check, the shares were down 3.8% to trade at $259.05. The stock is now within a chip-shot of its 200-day moving average -- a trendline that hasn't been breached on a daily closing basis since early January -- and is trading around a 50% Fibonacci retracement of its rally from its October lows to its May 1 high above $323. The $260 area also briefly acted as support and resistance in late 2018 and March 2019, respectively.
Heading into today, the equity's 14-day Relative Strength Index (RSI) stood at just 27 -- well into oversold territory. As such, it wouldn't be too surprising to see a short-term bounce for AVGO next week, and history is obviously on the stock's side. Over the longer term, however, the security's trajectory will likely be dictated by the temperature of U.S.-China trade negotiations, which as of right now is pretty chilly.