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Path of Least Resistance for Stocks Is Higher: Parets

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Imagine if a surgeon threw away a scalpel, or a plumber handed in his pipe wrench? That's exactly what AllStarCharts.com sr. editor and hedge fund manager J.C. Parets did today in his latest appearance on Breakout.That's right, this market technician says it's time to throw out the candlestick charts and go old school line chart.

"You've got to keep an open mind. Sometimes the candles make too much noise," Parets says, adding that right now, it's better to just ''step back'' and look at closing prices.

As the line chart below clearly shows, the S&P 500 has repeatedly bounced off of the trend line from the June lows, and the founder and president of Eagle Bay Capital says until that support is broken ''we have to stick with the trend."

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As for the numbers, Parets says the low 1,420s is the new support for the large-cap benchmark, with vulnerability to 1,370 should that level break.

"If it (1420) holds, we could test the all time highs," he predicts, pointing to what would be another 10% on top of a 35% rally that's now nearly four months old. The other caveats he has are the "mixed signals" from a seasonal perspective, particularly concerning the fourth year of a presidential cycle.

In the meantime, Parets says he likes large caps with particular favor for the Industrial (XLI) and Financial (XLF) sectors, and offers up names like Honeywell (HON) and 3M (MMM), as well as Citigroup (C), JP Morgan (JPM) and Goldman Sachs (GS).

For those worried that this rally is looking a little long in the tooth or tired, Parets counters by saying as long as we continue to make new highs, it's all systems go.

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