Dow 20K? These stocks could get us there

Dow 18K is officially back on the horizon as the index has rallied to within 3 percent of its all-time high. But while Wall Street eyes that as the next important level, some traders are looking at what stocks could take the index into uncharted territory: Dow 20K.

David Seaburg told CNBC's "Trading Nation" that, broadly speaking, in order to reach that lofty level, the winners need to keep winning and the losers need to pick up steam.

"For the Dow to significantly move higher, underperformers need catch up," the head of sales trading for Cowen and Co. said Thursday. Since the Dow is a price-weighted index, stocks with high nominal share prices carry more weight than lower-priced stocks, even if those lower-priced stocks have bigger market caps. In other words, a stock such as Goldman Sachs has a greater impact on the Dow than a stock like Apple, even though Apple is eight times bigger from a market cap perspective. It's because of that dynamic, Seaburg says "the bottom dwellers to get moving" in order for the Dow to really get going.

Read MoreThis contrarian indicator could point to more gains

Of the worst-performing stocks in the index, Seaburg flagged Exxon Mobil, Caterpillar and Chevron as the "best positioned" to take the Dow higher long term. Shares of each company are down a respective 9, 21 and 17 percent year to date. "Caterpillar will benefit from continued global economic improvement, and Exxon and Chevron will benefit from strength in the crude market as well as potential strategic M&A."

For Seaburg, if these stocks don't pick up the pace, the index will remain in "pause mode" for the foreseeable future. Seaburg identified the winners as names like Nike, Boeing and McDonald's.

Read MoreWhere's oil headed? Ask China

Looking at the chart of the Dow, technician Craig Johnson said the index is poised to break new highs as early as next year.

"The chart remains very bullish," Johnson said on Thursday. "At this point in time, the Dow is on track to retest the May highs and that sets us up to consolidate in the beginning of 2016 and then break topside for fresh highs," added the Piper Jaffray strategist. "I think there's more room to run for the Dow and broader market."

Want to be a part of the Trading Nation? If you'd like to call in to our live Wednesday show, email your name, number and a question to


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more