Technical analysts see something worrisome as the S&P 500 hits more record highs: The breadth of the gains are narrow. That is, a small number of stocks are participating in the record highs with 52-week highs of their own. That’s a downer for anyone looking for stocks to buy because a lack of breadth is usually a sell signal.
But a lack of breadth doesn’t mean the market is doomed. Sure, it warrants caution, but there’s ample reason to expect more market gains through year-end. Hey, even if stocks are in a bubble, they have plenty of room to inflate — the forward price-to-earnings ratio on the S&P 500 is nowhere near what we’ve seen in prior bubbles.
At the same time, stocks that are hitting 52-weeks highs usually have more gains ahead on technical strength alone. Friday’s session saw 26 stocks in the S&P 500 notch 52-weeks highs before noon, with pretty much every sector contributing.
The biggest names to recently hit new highs were Apple (AAPL), Walt Disney (DIS), Microsoft (MSFT) and Intel (INTC). Financials also notched some new highs, which you’re expect, since the Financial SPDR (XLF) keeps hitting one-year marks. Individual financials touching new highs of late include Morgan Stanley (MS), Invesco (IVZ) and Northern Trust (NTRS).
The following list of stocks to buy is a look at companies that are poised to keep setting new 52-week highs through the remainder of the year thanks to fundamentals, as well as technical indicators like trading above key moving averages.