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

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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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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