Dow, other key stocks form bullish 'golden cross'

Published Wed, Apr 20 20165:00 AM EDT

The strongest three-month rally in four years by the Dow Jones industrial average has pushed the benchmark above the eye-catching 18,000 level this week. More importantly for some technical analysts, the Dow on Tuesday formed a so-called golden cross pattern, a technical indicator often associated with further gains ahead. Since reaching a low on Jan. 20, the blue chip index is up nearly 15 percent, its strongest gain over a similar time frame since early 2012. The golden cross was formed when the Dow's 50-day moving average climbed above the 200-day moving average Tuesday, a move that analysts say could signal the start of a longer trend. Source: FactSet A number of blue chip names have also formed the bullish pattern… Using data from FactSet, CNBC Pro screened the S & P 500 for stocks with a golden cross formation. We then focused on the names that Wall Street analysts recommend buying now. Source: FactSet Shares of the asset management company are up 7 percent in 2016 compared with a loss of 2 percent for the S & P financial sector. Morgan Stanley analyst Michael Cyprys writes: "We argue that BLK has the best mix of product to drive higher and more sustainable cash earnings that should drive multiple expansion. BLK has built out leading private equity, real estate, credit, hedge fund of fund and secondaries fund businesses that continue to innovate and develop new products and strategies across its platform." As a group, analysts on the Street have an "overweight" rating on BlackRock. Source: FactSet Shares of the maker of home appliances are up 29 percent this year compared with a gain of 2 percent for the S & P consumer discretionary sector. In a recent note to clients, MKM Partners analyst Megan McGrath raised her estimates for WHR , noting that a weakening dollar, particularly in Brazil, should bode well for the company, which derives about half its revenue from international operations. "We believe that some portion of that recovery in the shares has been due to developments in Brazil as well as some other currency movements," McGrath wrote. Analysts on the Street have a consensus "buy" rating on ticker WHR. Source: FactSet Shares of the maker of machinery products are up nearly 16 percent year to date compared with a gain of 6 percent for the S & P industrial sector. "Investors are concerned that the nonresidential cycle cannot remain decoupled from energy and industrial headwinds. We disagree," Morgan Stanley analyst Nigel Cole wrote in a recent note to clients. Cole also thinks the stock trades at a discounted multiple to its peers, a metric as that could attract investors as they realize Ingersoll-Rand 's growth potential. Analysts on the Street have a consensus "overweight" rating on Ingersoll-Rand. Source: FactSet Shares of the maker of thermal imaging systems are up 17 percent in 2016 compared with a gain of 2 percent for the S & P information technology sector. "While the commercial end market remains mixed, FLIR continues to make solid progress on introducing new products that continue to aid the overall top- and bottom-line," Sterne Agee CRT analyst Peter Arment wrote in a recent note to clients. Arment believes there's an opportunity within the $8+ billion security camera market, which remains underpenetrated with thermal cameras. "With prices declining, thermal camera adoption continues to ramp," he notes, explaining that FLIR cameras should continue to see "broad adoption." Analysts on the Street have a consensus "overweight" rating on ticker FLIR. Source: FactSet Shares of the managed care company are up nearly 11 percent year to date compared with a loss of 2 percent for the S & P health-care sector. "We believe UNH shares are an effective way to invest in the growing U.S. health system across many different facets," Stifel analyst Thomas A. Carroll wrote in a note to clients Tuesday, reiterating a "buy" on the stock. Analysts on the Street have a consensus "buy" rating on UnitedHealth.

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Since reaching a low on Jan. 20, the blue chip index is up nearly 15 percent, its strongest gain over a similar time frame since early 2012. The golden cross was formed when the Dow's 50-day moving average climbed above the 200-day moving average Tuesday, a move that analysts say could signal the start of a longer trend.