Why Top Stocks Fail: Managing Investment Risks

Have you ever poured your heart into picking the perfect stock, only to watch it stumble just when you thought it was a sure bet? It’s a gut punch, isn’t it? I’ve been there, staring at a screen full of red numbers, wondering where it all went wrong. In the fast-paced world of investing, even the most promising names can falter, leaving you questioning your strategy. Today, we’re diving into the messy reality of two stocks that were once darlings of the market but are now teetering on the edge. This isn’t just about pointing out failures—it’s about understanding why they happen and how you can turn setbacks into opportunities.

When Best Stocks Stumble: A Closer Look

The stock market is a wild ride, full of highs and lows that test your patience and nerve. Every investor dreams of finding that golden stock pick—a company with solid fundamentals, a strong chart, and momentum to carry it forward. But what happens when those carefully chosen names start to crack? To explore this, we’ll zoom in on two companies that were once on the radar as top performers but have recently hit rough patches. By dissecting their struggles, we’ll uncover lessons on risk management, market signals, and how to spot potential comebacks.

Understanding Market Breadth: The Bigger Picture

Before we dive into specific stocks, let’s talk about market breadth. It’s like checking the pulse of the market—how many stocks are actually driving the rally? When breadth is strong, with lots of stocks climbing or sitting above key technical indicators like the 50-day moving average, it’s a sign of a healthy market. Think of it as a team effort: the more players contributing, the stronger the game.

Strong market breadth signals broad investor confidence, reducing the risk of a fragile rally driven by just a few big names.

– Financial analyst

Right now, the market is showing decent breadth, with 142 stocks on a closely watched list of top performers as of July 21, 2025. This suggests a robust uptrend, but not every stock is keeping up. Spotting the laggards—those names losing steam—can be just as valuable as chasing the leaders. It’s like noticing the one friend who’s lagging behind on a group hike; they might need a nudge, or they could be signaling trouble ahead.

Case Study: Expand Energy Corp (EXE)

First up, let’s talk about Expand Energy Corp, a major player in the U.S. natural gas scene. This stock caught attention earlier this year for its solid fundamentals and promising chart setup. Back in May, it was riding high, but fast forward to July, and things have taken a turn. The stock has slipped below its 50-day moving average, a key technical level that often signals a shift in momentum.

What’s behind this stumble? A big part of it is the drop in natural gas prices, which have tanked over 12% in the last month. When the underlying commodity takes a hit, stocks like EXE feel the pain. The chart shows EXE flirting dangerously close to its 200-day moving average, hovering around $100. If it breaks below this level, we could see more downside.

• Key Issue: Weakness in natural gas prices dragging down energy stocks.
• Technical Signal: Breach of the 50-day moving average, with the 200-day as the next critical support.
• Investor Action: Long-term holders should monitor weekly closes; short-term traders might sit this one out.

In my experience, stocks tied to commodities can be a rollercoaster. When prices firm up, as some analysts predict for energy, EXE could find its footing near $100. Analysts from major firms still see upside, with price targets in the $140s. But for now, patience is key—jumping in too soon could mean catching a falling knife.

Case Study: Deere & Co (DE)

Next, let’s turn to Deere & Co, a name that’s been hailed as an AI play in disguise thanks to its tech-driven farming equipment. This stock was a standout earlier this summer, breaking out in the spring and hitting an all-time high of $528 after a strong earnings report. But lately, it’s lost its shine, dipping below its 50-day moving average and testing support levels.

Unlike EXE, Deere’s pullback isn’t tied to commodity prices but to broader market concerns. With earnings looming on August 13, 2025, investors are jittery about potential headwinds like tariffs. The White House’s tough talk on trade could hit Deere hard, given its global supply chain. Still, the stock hasn’t yet threatened its 200-day moving average, which gives it some breathing room.

Deere’s pullback is a reminder that even strong stocks can face external pressures like tariffs or market sentiment shifts.

– Market strategist

For traders, this is a wait-and-see moment. The upcoming earnings could be a catalyst, but the risk of further selling is real if trade tensions escalate. Long-term investors might hold steady, but short-term players should keep their powder dry until the chart shows a clearer setup.

Risk Management: Staying Ahead of the Curve

So, what do you do when your top picks start to wobble? Risk management is the name of the game. It’s not just about picking winners; it’s about knowing when to cut losses or wait for a better entry point. Here’s how to approach it, based on what we’ve seen with EXE and Deere.

1. Monitor Technical Levels: Keep an eye on key moving averages like the 50-day and 200-day. A break below these can signal trouble, but a bounce could hint at a buying opportunity.
2. Assess External Factors: For EXE, commodity prices are the driver; for Deere, it’s trade policy. Understand what’s moving your stock.
3. Adjust Your Timeframe: Long-term investors can afford to wait out dips, while traders need to be nimble and exit when momentum fades.

Perhaps the most interesting aspect of these breakdowns is how they highlight the importance of staying flexible. Markets are dynamic, and even the best stocks can hit rough patches. By keeping a close watch on technical indicators and external drivers, you can make informed decisions rather than reacting emotionally.

Spotting Opportunities in the Rubble

Here’s the silver lining: a stock’s stumble can be a chance to buy low—if the setup is right. Both EXE and Deere are still on the radar because of their underlying strengths. For EXE, stabilizing energy prices could spark a rebound. For Deere, a strong earnings report might shake off the tariff fears. The trick is knowing when to act.

I’ve found that patience often pays off in these scenarios. Waiting for a stock to show signs of stabilization—like a bounce off a key support level or a shift in relative strength index (RSI)—can mean the difference between a smart buy and a costly mistake. For EXE, an RSI of 40 suggests it’s close to oversold, but it’s not quite there yet. Deere, meanwhile, might need a positive earnings surprise to regain its mojo.

Lessons from the Market: Staying Grounded

The stories of EXE and Deere remind us that no stock is immune to setbacks, even in a bull market. It’s tempting to chase every hot name, but the market has a way of humbling even the savviest investors. By focusing on market breadth, technical signals, and external factors, you can better navigate these choppy waters.

The market doesn’t care about your feelings—it rewards those who adapt and stay disciplined.

– Veteran trader

What’s the takeaway? Don’t fall in love with your stocks. Keep an eye on the bigger picture, stay nimble, and be ready to pivot when the data shifts. Whether it’s a commodity slump or a trade war scare, understanding the drivers behind a stock’s performance can help you make smarter moves.

Moving Forward: Building a Resilient Portfolio

Building a portfolio that can weather storms like these requires a mix of discipline and curiosity. It’s not just about picking the right stocks—it’s about knowing when to hold, when to fold, and when to wait. Here are some practical steps to keep your investments on track:

• Diversify Across Sectors: Don’t put all your eggs in one basket. If energy stocks like EXE are struggling, tech or consumer goods might balance things out.
• Use Technical Tools: Tools like RSI, moving averages, and support levels can guide your timing.
• Stay Informed: Keep tabs on news that could impact your holdings, from commodity prices to policy changes.
• Review Regularly: Check your portfolio weekly to spot trends before they become problems.

In my view, the real art of investing lies in balancing optimism with caution. Stocks like EXE and Deere might be down, but they’re not out. By staying disciplined and keeping an eye on the signals, you can turn setbacks into setups for future gains.

So, what’s next for you? Are you holding onto a stock that’s testing your patience, or are you ready to hunt for the next opportunity? The market is always moving, and with the right approach, you can stay one step ahead. Keep learning, stay curious, and don’t be afraid to rethink your strategy when the charts tell you it’s time.