Trading Nation

Here's where two traders say to invest with the stock market at record highs

Here's where to invest at record highs
Here's where to invest at record highs

Stocks are in never-before-seen territory.

The S&P 500, Dow Jones Industrial Average and Nasdaq look to open Monday morning higher, fresh off record closes last week.

Bill Baruch, president of Blue Line Capital, says it pays to be careful but there are still pockets of opportunity.

"I'm still worried that there could be something more broadly that just encourages a near-term correction, so I'm hesitant to chase things, but when I look at the charts, there are some names out there or some sectors out there that say they're going higher," Baruch said on CNBC's "Trading Nation" on Friday.

One name on his watchlist is Alphabet, among the best-performing stocks over the past three months.

"There's a rising trend line [in Alphabet] and it came in right about $1,300 in the early part of this month, and it broke out above there. Not only did it break out on November 7, it came back and retested $1,300 and held it," Baruch said. "There's higher to go, the chart is telling me this."

Baruch is also bullish on another corner of the tech sector — semiconductors.

"The chips have been on fire, but I do want to avoid the idiosyncratic risk of owning a particular or one or two or handful of them. I like looking at the SOXX ETF, and that has [also] broken out, and not only did it break down in October and rally sharply, we've settled in, created a bull flag in November, and now with this bull flag, we're moving out above there. So this is a very bullish setup."

A bull flag is formed during a period of consolidation. It suggests to chart analysts that a stock or ETF is taking a breather before resuming its upward trend.

Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, says a number of sectors are beginning to show momentum.

"We still think there's value, especially tech, financial and in health care because everything is starting to point in the right direction geopolitically," Bapis said during the same segment. "Also, we're seeing sectors that weren't performing for whatever reason, start to perform from the tax overhaul, from the monetary stimulus."

The information technology, health-care and financials sectors are among the best-performing groups on the S&P 500 this quarter.

Two names in the tech sector and one financials stock look particularly enticing to Bapis.

"Apple, Intel — they change their whole business model to be able to deal with the tariffs and trade wars as well as to be ahead of the innovation, and then you have companies like J.P. Morgan in the financial sector — still trading at 12 times earnings with a really good dividend yield in these interest rates environments," Bapis said.

Apple, Intel and J.P. Morgan have been among the top drivers leading the market rally to records this year.

Disclosure: Blue Line Capital holds GOOGL and SOXX.