As the Dow soars, technician names Apple, and two others as stocks to watch

Even as the Dow soared more than 300 points on Friday, around two-thirds of the index was trading in correction territory or worse, making picking favorites a minefield.

One technician has navigated the Dow and isolated two stocks to dodge and one to hold.

"We think you avoid J&J, avoid IBM, and you long Apple," said Chris Verrone, head of technical analyst at Strategas Research Partners, on CNBC's "Trading Nation" Thursday.

On Apple, Verrone says the stock has based over the past 12 to 15 months and its recent breakout signals greater upside from here.

"Over the last few weeks it's been a relative outperformer in what's otherwise been a difficult tape," said Verrone. "We start to get above $180, we think it targets $200. So, one of the better options there."

Apple shares burst above $180 to an all-time high Friday, bypassing the last record set in mid-March. A move to $200 implies nearly 10 percent upside from current levels.

IBM is "among the weaker pictures" on the Dow, according to Verrone.

The tech company "is in the midst of this multiyear top breaking down late last year and then rolling over here again," said Veronne, pegging $140 as the stock's key support. "We don't think it holds. We think ultimately that one is headed lower."

A sharp decline in April pulled IBM shares below their 50-day and 200-day moving averages. Its stock has fallen 16 percent from its 52-week high set Jan. 18.

It's a similar story on Johnson & Johnson's charts. The "multiyear uptrend is now broken" and it's one of the "more broken, vulnerable names," said Verrone.

It's been an ugly year for J&J. The stock entered a death cross in mid-March, where its 200-day moving average moved above its 50-day moving average. That technical indicator typically signals a bearish trend.

J&J shares are down 16 percent from their 52-week high set Jan. 17. The stock has fallen 11 percent in the year to date.

Bill Baruch, president of Blue Line Futures, agrees with Verrone's bullish call on Apple and has two more names to add to the 'buy'"column.

"Boeing and UnitedHealth can really pull some weight," Baruch told "Trading Nation" on Thursday.

His picks won't be the only ones to get a boost, according to his forecasts. The broader market should also catch a wave higher.

"I'm very bullish on the equity market in general," Baruch said. "The Dow has 3 to 5 percent [upside] in the coming weeks and I think everybody's going to look back then and say, 'wow, earnings were great.'"

Stock markets have moved lower since the kickoff to the earnings season in mid-April even as companies showed off earnings growth in the double digits. The S&P 500 is essentially flat since the big banks reported earnings April 13.


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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

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