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Two Market Analysts Flag Their Favorite High-Flying Trades With Stocks at Records


The record-high market still has pockets of opportunity, according to two traders.

Stocks started 2021 strong, ending the first trading week of the year with the S&P 500 industrials, consumer discretionary, information technology, materials and health-care sectors reaching all-time highs.

"As we look at this entire market, it's really been a story of rising water lifting all boats," Craig Johnson, senior technical research analyst at Piper Sandler, told CNBC's "Trading Nation" on Friday.

"We're overweight tech, we're overweight consumer cyclicals and we're also overweight industrials," he said.

Referring to a chart of the Industrial Select Sector SPDR Fund (XLI), Johnson said the ETF was just starting to break out to new highs, which technical analysts tend to see as a sign of strength.

"If we're going to get a reopening trade, ... I would think that we're going to start to see some of these early cyclical-type names really start to perform and do very well," he said, saying the charts of XLI components Honeywell, Caterpillar, Deere and GE were "starting to look a lot more constructive."

"This is an area that I think will do very well throughout the remainder of 2021," Johnson said.

Danielle Shay, director of options at Simpler Trading, was more focused on the growth trade.

"I love the semiconductors, I love solar stocks right here, I also like the hot new IPOs and I'm watching the FAANG stocks, particularly for a run into earnings at the end of this month," she said in the same interview, referring to tech giants Facebook, Amazon, Apple, Netflix and Google parent Alphabet.

"But one space that I think hasn't really gotten a lot of attention that probably should get a little bit more attention is going to be the cloud-based internet security companies," she said.

Cloudflare, Zscaler and Appian were among Shay's top picks in the space.

"You have people working from home. We've had to make a lot of adjustments," Shay said. "Companies have to make a lot of adjustments as well, and they're going to have to provide clients internet security at their homes. And so, I think that this is a space that's going to really continue to grow."

Disclosure: Piper Sandler is a registered market maker for Apple, Amazon, Alphabet and Netflix. Shay owns shares of Cloudflare.


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