Stocks are in the midst of their best rebound since the October rally out to the August-September lows. Small caps, precious metals, and material stocks have led the way thus far.
But the rest of the market is quickly working to catch up.
You can see this in the way measures of market breadth — the percentage of stocks participating to the upside — has been steadily expanding. Among S&P 500 stocks, the percentage in uptrends has grown from a low of less than 25% in January to more than 66% now.
As breadth expands, a growing list of stocks look ready for big breakouts from multi-month declines. For bargain hunters looking to participate in the market’s newfound strength, here are six mega-cap stocks looking ready for powerful surges to the upside.
Mega-Cap Stocks: Morgan Stanley (MS)
Morgan Stanley (MS) shares are preparing to break up and over resistance at $26 per share and have already bounced 20% off of the low set in early February. The 50-day moving average is just overhead as well. A breakout would set up a test of the 200-day moving average not tested since August, which would be worth a gain of nearly 30% from here.
Bank stocks in general are getting a lift on fading fears about the credit markets as junk bond prices recover. Investment banks like MS are getting additional help by the recent drop in capital market volatility.
Mega-Cap Stocks: Intel (INTC)
Shares of chipmaker Intel (INTC) have broken up and over their 200-day moving average for the first time since October — also crossing over their 50-day moving average in the process. Watch for a run at the October-December high near $35, which would be worth a 13% gain from current levels.
INTC stock is also benefiting from an upgrade by analysts at Baird on the belief the company has reached critical mass on plans to resume earnings per share growth in 2017. Another catalyst is a possible positioning for a tier-one smartphone ramp in the second half of the year.
Mega-Cap Stocks: Disney (DIS)
Shares of media giant Disney (DIS) have punched up and out of a three-month consolidation range on Thursday, also crossing up and over its 50-day moving average near $97.50. This puts an end to a downtrend going back to November that capped a double-top pattern with resistance near $120. A run back at that level would be worth more than a 20% gain from here.
Worries over cord cutting and the company’s television properties are fading as investors look ahead to the next earnings report on May 3 before the bell. Edge Pro subscribers are enjoying a 22% gain in the March $97.50 DIS calls recommended on Feb. 22.
Mega-Cap Stocks: Citigroup (C)
Shares of Citigroup (C) are on the verge of punching up and over three-month resistance near $42.50 and its 50-day moving average. A breakout would end the medium-term downtrend that has been in place since November in the context of a larger downtrend that started last summer.
Watch for a run at the 200-day moving average for a gain of more than 20% from here.
Mega-Cap Stocks: General Motors (GM)
Shares of General Motors (GM) are rallying up and over resistance near $30 that has been in place since January to cross up and over its 50-day moving average for the first time since December. Blowout auto sales numbers earlier in the week — with lots of interest in high-profit light trucks thanks to cheap gas prices — are driving investors back into the stock.
A return to the October-December high near $36 would be worth a more than a 16% gain from here.
Mega-Cap Stocks: Apple (AAPL)
Tech giant Apple (AAPL) — as I mentioned in a previous article — has broken up and out of a three-month consolidation range near $100 a share on rising hopes for a product debut announcement later this month (4-inch iPhone and new iPads) as well as building hype for the iPhone 7 launch later this year.
A run at the 200-day moving average, not tested since November, would be worth around a 12% gain from current levels. Edge Pro subscribers are enjoying a 51%+ gain in their March $100 calls recommended on February 17.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
