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Two Dow stocks to buy and one to fade in a volatile market

Keris Lahiff


The Dow is getting whiplash this week. The blue-chip index is seeing another triple-digit rally on Thursday, its second since Monday, after a trade sell-off midweek.

Matt Maley , equity strategist at Miller Tabak, sees two Dow stocks to buy and one he would avoid in this market’s swings and roundabouts.


Building to a breakout

A stronger dollar and trade concerns took multinational manufacturing stock 3M down to 52-week lows in May, but a comeback in recent months has Maley seeing the potential for a bigger breakout.

“Over the last two months, it’s been forming a nice base and, in fact, in the most recent little pop it got above its trendline going back to the January highs,” Maley told CNBC’s “ Trading Nation ” on Wednesday.

Maley is now watching for whether 3M can rally back to its March highs, still a 23 percent rally away. If it can do that, Maley sees the likelihood that the stock has “reversed its trend.”

3M’s story is less exciting to Boris Schlossberg , managing director of FX strategy at BK Asset Management.

“It’s just simply basically a very boring growth story,” Schlossberg said on Wednesday’s “Trading Nation.” “They simply haven’t been able to achieve the kind of organic growth the market is looking for.”

A winning formula

Like 3M, Maley sees the potential for a technical breakout ahead for Johnson & Johnson .

“It’s broken above its trendline going back a few months, and it’s right up against its March highs, so if it gets a little bit higher from here, again at least on a technical basis, that’s going to be quite positive,” said Maley.

Schlossberg is skeptical about Johnson & Johnson, too, fearing its market share could be invaded by Amazon.

“Amazon is going to destroy all consumer-branded companies going forward,” said Schlossberg. “I’m already buying a lot of Amazon generic goods on the site, and I love it, and I think if J&J is kind of in their eyesight that could be a big problem for the market going down the road.”

Stormy skies ahead

After a big runup to all-time highs this year, Maley sees a technical breakdown forming in Boeing shares.

“It’s moved below an even longer-term trendline going back a full year, and it’s not that far from making a lower low,” explained Maley.

Maley sees a lower low potentially at $320, a level Boeing closed at in March. It is still a 7 percent sell-off from those lows.

Boeing shares are up nearly 17 percent in the year to date, while Johnson & Johnson has dropped 9 percent and 3M is down 16 percent.


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