This Defense Stock Is Resisting Market Weakness. Here's Where To Get In.

A bullish chart pattern in Leonardo DRS (DRS) stock is revealing potential hidden strength even as the wider market continues to grapple with conflict-related uncertainty.

Shares of the defense technology provider are finalizing a cup-with-handle pattern with a breakout point of 47.74, according to data from MarketSurge. The pattern has continued for 34 weeks and began last August. The cup has a depth of 34%.

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Although Leonardo DRS stock has not moved past the pattern’s breakout point, shares have moved above a trendline entry within the handle. The stock appears poised to benefit from the Iran-Israel-U.S. conflict that began nearly a month ago.

Arnie Gutierrez, senior premium product coach at IBD and IBD Live panelist, sees the bullish pattern as a good sign for the stock. “You have that cup-with-handle and again you have to ask yourself, with so much weakness in the market, why are these stocks not falling apart?” he told Investor’s Business Daily’s “Investing with IBD” podcast.

Audio Version Of Podcast

He says the stock is seeing institutional support, with strong upside volume on the weekly chart and a solid Accumulation/Distribution rating of B.

“I like looking for, historically speaking, stocks that are pulling back to the 50-day moving average,” Gutierrez said. “The stocks that are going to be supported by the smart money … they’re going to start getting bought around the 50-day or the 10-week line.”

Gutierrez says he created a screen to watch for names that fit into this category, which includes Leonardo DRS stock.

While investors can consider some new positions in stocks, the current market pullback means investors should use strategies that minimize risk as much as possible. This includes taking small, manageable position sizes and strictly adhering to sell rules.

IBD recommends investors keep their portfolios 0% to 20% exposed to the stock market at this time. Stocks like Leonardo DRS that show potential can be added to potential lists for when conditions improve and institutional buyers return to the broad market in a notable way. “You may want to be looking at these stocks as potential goes around,” Gutierrez said. “The smart money’s holding them up.”

For more insights into Leonardo DRS stock, watch the full podcast episode here.

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