Three Rock-Solid Names to Watch

Well, well, well. After two straight days of nice gains for the major averages, the market is making a case it wants to go higher. But is it a convincing case? Volume-wise it's not, but in terms of institutional-quality stocks setting up for possible breakouts, the situation gets a little better -- not a whole lot better, but better nonetheless. I can't say I disagree entirely with those who say, the market needs more time, which implies one last shakeout could be seen in the major averages before new money can start coming in from the sidelines in earnest. This may be true -- but when everyone seems to be saying it, it's not out of the question that a rally could gain traction sooner than expected. It's really about Europe at this point. Investors liked recent news that China might buy Italian bonds. Maybe it can buy Greek bonds while they're at it. The bottom line is that, if headline flow out of Europe continues to improve, it would do a lot to alleviate investor angst. It's hard not to notice the strength in large-cap, institutional-quality names such as Apple (AAPL), Intuitive Surgical (ISRG) and Amazon (AMZN). All three have continued setting up nicely. If institutional buyers come into these names soon, we could have a nice year-end rally on our hands. But the big question is whether volume will come into these names in the near term. Volume has been light in Apple for some time now, but it's been able to firm up nicely at its 50-day moving average. The stock isn't far from a potential breakout try above its Aug. 31 intraday high of $392.08. A fair amount of selling hit the stock between July 27 and Aug. 5. Its recent strength hasn't been the result of institutional buying, but a move above $392.08 can't be ruled out. Apple (AAPL) -- Daily Source: StockCharts.com View Chart » Intuitive Surgical, which makes the da Vinci robotic surgical platform, is showing solid fundamentals here. The stock has been consolidating gains since July and isn't far from a buying area of $389. Intuitive was also hit hard by institutional selling between July 22 and Aug. 22, but it has recovered nicely. Intuitive Surgical (ISRG) -- Daily Source: StockCharts.com View Chart » Finally, Amazon continues to flex its muscle and is very close to a buying area of $220.64. I'd like to see Amazon consolidate a little more under this price level before it attempts a breakout. Either way, its technical picture is solid. Rumors have been rampant recently that Amazon is set to release its own tablet computer to compete with Apple's iPad, Research In Motion's (RIMM) Blackberry Playbook and Samsung's Galaxy Tab. Amazon (AMZN) -- Daily Source: StockCharts.com View Chart » Several other high-quality growth names look compelling, as well, including Alexion Pharmaceuticals (ALXN). It's a highly profitable drugmaker with a market capitalization of around $11 billion whose main drug, Soliris, is used to treat a rare blood disorder. The stock recently broke out in decent volume above $59.07. Based on the way it's been trading post-breakout, I believe there's a good chance for more upside in this name. Shares closed Tuesday at $59.87, still within buying range. Alexion Pharmaceuticals (ALXN) -- Daily Source: StockCharts.com View Chart » The market has also dished up some leadership in smaller names like Athenahealth (ATHN) and Mako Surgical (MAKO). Both stocks turned in strong performances on Tuesday, rising 8.5% and 9.5%, respectively. I featured Athenahealth in a One-Minute Trade video over at The Street last week, and I featured Mako Surgical in a Real Money piece earlier this week. The bottom line is that it's OK to own a speculative small-cap or two in the early stages of a market rally, but your portfolio should also have exposure to institutional-quality names that stand to benefit the most when fresh money is put to work. Granted, this is not an easy market to trust. But I can't completely ignore the bullish charts out there that tell me the rally could have more juice. I'm still favoring cash but will be ready to act, especially if the institutional-quality names in the market start heading higher in expanding trade. If they do, great -- but, if they don't, I'll continue to be patient and wait for volume.

Three Rock-Solid Names to Watch

If institutional buyers come into these stocks soon, we could have a nice year-end rally on our hands.

Columnist Conversation

A Recent Director Buy in Children's Place (PLCE)

A $525,000 Vote of Confidence on Macerich (MAC)

This Weekend on Real Money

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.