Stocks wavered on Monday, inching higher before finally pulling back in the afternoon in a relatively quiet session as Friday’s FX-powered rip higher is consolidated.
Click to Enlarge I’m looking for a powerful breakout of the long consolidation pattern in the NYSE Composite, fueled by a long-awaited upswing in market breadth as U.S. equities demonstrate the melt up behavior already seen in foreign bourses.
Leading the way higher will be many blue-chip stocks that have been hamstrung by sensitivity to the strengthening dollar, which has punished commodity prices, damaged export competiveness, and lowered the value of foreign profits when repatriated.
But now that officials at the Federal Reserve are once again making dovish noises — by halving the number of interest rate hikes they expect this year — a turnaround is in order.
Here are five blue-chip stocks worth a look:
5 Blue-Chip Stocks Poised for a Turnaround: Caterpillar Inc. (CAT)
Click to Enlarge After double bottoming off of its late January low, Caterpillar Inc. (NYSE:CAT) stock looks set for a return to its February highs near $86 at the very least.
Last week, the company reaffirmed its fiscal 2015 guidance as the pace of the decline in global machine sales is abating somewhat.
The Apr $82.50 CAT calls I recommended to Edge Pro subscribers last week are already up nearly 62% with room for much more.
5 Blue-Chip Stocks Poised for a Turnaround: International Business Machines Corp (IBM)
Click to Enlarge After topping out in 2012, International Business Machines Corp. (NYSE:IBM) shares drifted sideways for a couple years before collapsing 23% from its late 2014 highs on weak results and skepticism over its focus on debt-fueled share repurchases.
But now, the bulls are coming back in as shares look ready to break out of a six-month consolidation range to fill the gap from last October’s meltdown.
I’ve recommended the Apr $165 IBM calls to my Edge Pro subscribers.
5 Blue-Chip Stocks Poised for a Turnaround: Intel Corporation (INTC)
Click to Enlarge Intel Corporation (NASDAQ:INTC) stock, like many others on this list, has been pushed down to test its mid-October lows on pessimism over business conditions.
With Intel, it was all about disappointing forecasts for PC sales this year as well as inventory levels in the supply chain. But with restocking a necessity and the big Windows 10 release debuting this summer, the bad news has already been discounted; clearing the way for a rebound.
I’ve recommended the Apr $32 INTC calls to Edge Pro subscribers.
5 Blue-Chip Stocks Poised for a Turnaround: Procter & Gamble Co (PG)
Click to Enlarge After falling all the way down to its mid-October lows, retesting levels first hit in August, Procter & Gamble Co (NYSE:PG) stock is rebounding back above its 200-day moving average as the maker of Tide, Bounty, and Charmin attracts buying interest.
This comes despite some negative publicity out of China, where regulators are charging that the company made false claims about its Crest toothpaste by digitally altering images in its ads to make teeth look whiter.
Much of this is due to the interest dividend yielding stocks like PG, which yields more than 3%, are getting thanks to the recent rise in Treasury bonds.
The Apr $85 PG calls I’ve recommended to Edge Pro subscribers are already up nearly 20%.
5 Blue-Chip Stocks Poised for a Turnaround: American Express Company (AXP)
Click to Enlarge Shares of American Express Company (NYSE:AXP) lost as much as 17% from their late December highs, testing their mid-October lows, after reporting weak core quarterly results and announcing layoffs.
Shares are turning around now, however, pushing above their 50-day moving average as the story turns back to growth initiatives such as reports the company will launch a loyalty program with companies such as Macy’s, Inc. (NYSE:M), Exxon Mobil Corporation (NYSE:XOM) and AT&T Inc. (NYSE:T).
I’ve recommended the Apr $82.50 AXP calls to my Edge Pro subscribers.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.You can e-mail the author at: anthony@edgeletter.com
