The bulls are foaming at the mouth again on Tuesday as the post-Brexit melt up continues on narrow breadth and light volume. No matter. There is word — out of Japan — that another aggressive round of monetary policy stimulus is incoming. Spurred by no less than Mr. Ben Bernanke himself as the former Federal Reserve chairman is in Tokyo consulting with government and Bank of Japan officials.
The long and short of it: Encouraged by an electoral victory, and disappointed by ongoing debt-deflation malaise amid eye-watering public debt-to-GDP levels, Prime Minster Abe is likely to unleash a version of Bernanke’s “helicopter money” via a $100 billion fiscal stimulus funded not by debt, but by fresh money printed by the BoJ.
For the monetary junkies on Wall Street, excitement over this trumps everything else. The ongoing earnings recession doesn’t matter. Expensive valuations don’t matter. Uneven economic data should be ignored. Look away from fresh weakness in crude oil. And never mind that the Fed is still penciling in two quarter-point rate hikes this year.
The focus now is on the stocks that have yet to surge higher. Consider that only 15% of S&P 500 stocks are making new highs today. Or that the majority of stocks, as measured by the NYSE Composite, remain well below their 2015 highs.
If the melt up is going to continue, these five Dow Jones Industrial Average stocks are going to have to perk up and surge higher.
Dow Jones Titans Ready to Breakout: American Express Company (AXP)
American Express Company (NYSE:AXP) is prepared to blast above its 50-day and 200-day moving average for the first time since a long and painful downtrend started in early 2015. Investors have been avoiding the stock after it lost its exclusive credit deal with Costco Wholesale Corporation (NASDAQ:COST) amid nagging growth concerns.
The company will report results on July 20 after the close. Analysts are looking for earnings of $1.92 per share on revenues of $8.3 billion.
Dow Jones Titans Ready to Breakout: Caterpillar Inc. (CAT)
Heavy equipment maker Caterpillar Inc. (NYSE:CAT) looks ready to break above resistance from its April high near $80 to take the challenge to its early 2015 highs near $85. Shares remain well off of the high of $104 set in the summer of 2014, as the downturn in energy and commodity prices has put the chill on new orders from mining, exploration and production companies.
The company will next report results on July 26 before the bell. Analysts are looking for earnings of 97 cents per share on revenues of $10.1 billion.
Dow Jones Titans Ready to Breakout: Walt Disney Co (DIS)
One-time momentum favorite Walt Disney Co (NYSE:DIS) has been languishing since late last year, after hype from the company’s Marvel and Star Wars franchises gave way to concerns about cord cutting and its television business. Shares have since languished near resistance around $100. But another breakout attempt above the 200-day moving average looks likely here, setting DIS up for a challenge to its May highs.
The company will next report results on Aug. 9 after the close. Analysts are looking for earnings of $1.61 per share on revenues of $14.2 billion.
Dow Jones Titans Ready to Breakout: The Coca-Cola Co (KO)
After enjoying a steady upswing out of its August lows last summer, The Coca-Cola Co (NYSE:KO) climbed by nearly a third into the highs set back in April. A pause has refreshed the optimists, setting up an upside breakout and fresh highs, as three-month resistance near $45.50 is challenged.
The company will next report results on July 27 before the bell. Analysts are looking for earnings of 58 cents per share on revenues of $11.7 billion.
Dow Jones Titans Ready to Breakout: Home Depot Inc (HD)
Home improvement giant Home Depot Inc (NYSE:HD) has been a perennial outperformer within the Dow, but has uncharacteristically taken a backseat since November. HD backtracked on lingering doubts over the health of the American consumer. Shares are now challenging the consolidation pattern with a run at the April-May highs near $136, setting up a breakout.
The company will next report results on Aug. 16 before the bell. Analysts are looking for earnings of $1.97 per share on revenues of $26.47 billion.
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.
