Some of Tuesday’s winners are still worth watching for opportunity, according to one chart analyst.
Shares of JPMorgan, Deere, Microsoft, PayPal and Caterpillar hit record highs Tuesday, fueled by a rise in “risk-on” sentiment after the Cboe Volatility Index broke below a key psychological level last week.
Though the market’s march to records is likely not over, investors may still get a chance to buy into some of the winners, Bill Baruch, founder and president of Blue Line Capital, told CNBC’s “Trading Nation” on Tuesday.
Record highs often indicate that a lot of the narratives fueling these stocks “have already played out,” Baruch said, pointing to PayPal’s cashless payments franchise and its foray into cryptocurrency.
Baruch said he would be trimming his positions in PayPal and Microsoft, his two top holdings, and watching for buy signs on their charts.
“I want to know where to go shopping for these again,” he said.
Looking at a chart of Microsoft, Baruch flagged “a nice wedge breakout here over the past couple weeks.”
“Wait for a retest back into some of that range” around $215-$225, he said. Microsoft shares ended trading Tuesday at $243.70, down about half of 1%.
The buying range Baruch was looking at on PayPal’s chart was closer to $230-$265, he said in a Tuesday email to CNBC. That stock finished trading up more than 2% on Tuesday at $304.79 a share.
The chart analyst also had his eye on Deere, which he noted has seen a “very steady climb” since May.
“You draw a trend line on something like that, you know where to go shopping” — right around the $300 level, Baruch said.
Deere closed up more than 1% at $317.09 on Tuesday. The company is scheduled to report earnings on Friday.
“There are some really good technical charts out here to take a look at, and what I can really emphasize is have your shopping list for a pullback because I think volatility’s going to continue this year as we make our way up to 4,625 in the S&P 500,” Baruch said.
Two of those names also caught the attention of Delano Saporu, founder and CEO of New Street Advisors Group.
“I like PayPal,” Saporu said in the same “Trading Nation” interview. “We’re seeing the move to contactless payment solutions. That theme is still playing here, especially in these times. We’re seeing the e-commerce trend growing and that’s something that PayPal can take advantage of. And also, we’re seeing the crypto craze.”
Those themes can coalesce to drive the stock higher, Saporu said — and from his perspective, same goes for Microsoft.
“The gaming, the hybrid cloud, those things still stand strong,” he said of Microsoft. “I think that you still have opportunity to get into those names.”
Disclosure: New Street Advisors Group owns shares of PayPal and Microsoft.
